FTX Probing Possibility of Reclaiming Payments Made to Celebrities
FTX Group advisers are currently investigating whether they can recover millions of dollars paid to celebrities such as Shaquille O’Neal and Naomi Osaka for their endorsements of Sam Bankman-Fried’s cryptocurrency platform before its collapse. Financial advisers hired by FTX have examined the payments made to these athletes to determine if they can be reversed under the rules that allow companies to reverse transactions executed just before filing for bankruptcy. FTX leveraged the fame of celebrity athletes, Major League Baseball (MLB), National Basketball Association (NBA) teams, and Formula 1 to enhance its brand visibility. The extent to which the payments can be recovered remains unknown, as well as whether any athletes or teams have offered to return the funds. FTX has disclosed several payments made to athletes, teams, and leagues, but warns that the disclosures may not be comprehensive due to a lack of detailed record-keeping.
FTX Paid Millions to Professional Athletes and Teams
FTX’s disclosures reveal that significant payments were made to various professional athletes and teams. For example, MLB received around $4.9 million for umpires to wear FTX logo patches. Partnership agreements with the Formula 1 racing team Mercedes-AMG Petronas amounted to at least $12.2 million. The NBA’s Golden State Warriors received $3.4 million, and Stephen Curry’s business, SC30 Inc., received nearly $242,000. FTX has indicated that some of these payments may potentially be reversed under Chapter 11 bankruptcy. Alvarez & Marsal, FTX’s financial adviser, has analyzed the possibility of undoing payments to the Warriors, including a $2 million transfer made approximately a month before FTX filed for bankruptcy. Other athletes mentioned in FTX’s disclosures include Trevor Lawrence, David Ortiz, and Shaquille O’Neal.
Hot Take
FTX’s investigation into reclaiming payments made to celebrities highlights the complexities and risks associated with endorsement deals in the cryptocurrency industry. The collapse of the platform and subsequent bankruptcy filing raise questions about the effectiveness of leveraging celebrity endorsements as a marketing strategy. FTX’s lack of detailed record-keeping and reliable financial information further exposes the challenges faced by companies operating in this space. This situation serves as a cautionary tale for both crypto companies and celebrities, emphasizing the importance of due diligence and thorough financial management. It remains to be seen whether FTX will be successful in recovering any of the payments, but this case underscores the need for transparency and accountability in the cryptocurrency industry.
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