FTX Advisers Investigating Recovery of Payments to Sports Stars for Partnerships and Endorsements
FTX’s financial advisers, Alvarez & Marsal, are conducting an investigation into the possibility of recovering funds that the exchange paid to celebrity athletes, including Naomi Osaka and Shaquille O’Neal, for partnerships and endorsements. The aim is to use these recovered funds to offset claims made by FTX’s customers and creditors following its bankruptcy filing in November 2022.
In court filings, FTX disclosed that it reviewed payments made to individual athletes, Major League Baseball (MLB), and Formula 1 racing teams to determine if they could be reversed under Chapter 11 rules. FTX had used its association with sports stars and leagues to enhance its reputation, paying $4.9 million to MLB and $12.2 million to Formula 1 before filing for bankruptcy.
The advisers believe that a portion of the Formula 1 payment could be recovered through Chapter 11 rules. Other athletes who received payments from FTX include Trevor Lawrence and David Ortiz.
Hot Take:
FTX’s move to investigate the recovery of funds paid to sports stars for partnerships and endorsements highlights the complexities faced when a crypto exchange faces financial turmoil. While such partnerships can bring visibility and legitimacy to the platform, they can also complicate matters during bankruptcy proceedings. This case serves as a reminder that businesses in the crypto space must carefully manage their financials and contractual obligations to protect all parties involved.
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