Seemingly out of nowhere, the conversation around cryptocurrency became unavoidable, even in spaces you'd least expect. Take sports for example, where you wouldn't anticipate there to be a direct connection between everything from Ethereum and Bitcoin to touchdowns and 3-pointers, and yet, here we are.
Since the first week of November, significant news in the cryptocurrency market caused an instant ripple effect on some of the most prominent athletes, franchises and leagues in sports.
FTX, a cryptocurrency exchange that had a heavy crossover into the sports world, filed for bankruptcy, leaving several investors shortchanged.
If you've seen FTX come across your TV or timeline but aren't yourself peddling in crypto and wondering why athletes like Tom Brady and Stephen Curry are connected, you've come to the right place.
What is FTX?
By definition, FTX is, "a cryptocurrency exchange that promotes the liquidity and transacting of coins and tokens." In layman's terms, it was a platform that allowed investors to buy, sell and trade digital currencies.
FTX prided itself on its accessibility and ease with which new investors could get involved, which was part of the company's main pitch into the world of sport. FTX tied itself in with well-known investors like Tom Brady and Stephen Curry, even using the two all-time greats in commercials to express the simplicity of FTX's platform to trade crypto.
FTX promised excitement with an accessible entry point into the often-times confusing world of cryptocurrency.
Who is Sam Bankman-Fried?
The name at the center of FTX's collapse is the company's CEO, Sam Bankman-Fried.
Bankman-Fried was reportedly using FTX's customer funds for trading through his own separate trading firm, Alameda Research.
This was significant because, according to CNBC, "The crypto exchange drastically underestimated the amount FTX needed to keep on hand if someone wanted to cash out. Trading platforms are required by their regulators to hold enough money to match what customers deposit. They need the same cushion, if not more, in the event that a user borrows money to make a trade. FTX did not have nearly enough on hand."
This put FTX on the brink of bankruptcy until one of the company's biggest rivals, Binance, was prepared to make an effort to acquire FTX to keep the business running. Once Binance reviewed FTX's finances, it decided not to step in.
Two days later, FTX plummetted from a $32 billion cryptocurrency monster to filing for Chapter 11 bankruptcy, vanishing reportedly $1 billion in customer funds.
FTX was by far the largest cryptocurrency exchange tied to the world of sport.
Breakdown of crypto sports sponsorships pic.twitter.com/FIAqpaATj8
— Adam Seaborn (@AHBSeaborn) November 11, 2022
Let's take a look at how it affected some of its most prominent investors.
Tom Brady FTX investment
Brady and his partner, Gisele Bundchen, reportedly bought an equity stake in FTX and both even appeared in commercials for the crypto exchange.
Since the announcement of FTX's bankruptcy, Brady has reportedly cleaned his social media platforms of any mention of the former crypto giant. That included deleting 15 tweets mentioning FTX that had subsequently been retweeted by Bankman-Fried and changing his Twitter avatar from a laser eyes photo (a crypto reference) to a statue of himself.
Stephen Curry FTX investment
In September 2021, Curry signed a partnership with FTX that gave him an equity stake in the company and as you saw above, the company used the greatest shooter in NBA history as a global ambassador in their commercials and advertisements.
"I'm excited to partner with a company that demystifies the crypto space and eliminates the intimidation factor for first-time users," Curry said after signing the deal.
Curry's team, the Golden State Warriors, were also big investors in the space. FTX signed a $10 million sponsorship with the franchise, featuring the brand all over their new arena, Chase Center, as well as the franchise's G League team, the Santa Cruz Warriors, and NBA 2K League team, Warriors Gaming.
FTX collapse leads to Miami Heat arena name change
Just last year, the Heat signed a 19-year, $135 million (!) deal with FTX for the naming rights to their stadium — FTX Arena. Or should I say, formerly known as FTX Arena.
After last week's news, Miami-Dade County and the Heat issued a joint statement on FTX.
"The reports about FTX and its affiliates are extremely disappointing. Miami-Dade County and the Miami HEAT are immediately taking action to terminate our business relationships with FTX, and we will be working together to find a new naming rights partner for the arena. We are proud of the impact our Peace & Prosperity Plan — sponsored by County Commissioner Keon Hardemon and funded through the original deal — is already having in preventing violence and creating opportunity for young people across Miami-Dade, and we look forward to identifying a new partner to continue funding these important programs in the years ahead.”
MLB's official cryptocurrency exchange
In June 2021, Major League Baseball signed a deal with FTX to become the "Official Cryptocurrency Exchange brand of MLB." The terms of the deal were never disclosed.
MLB turned its umpires into FTX billboards as part of the deal, calling FTX its "first-ever umpire uniform patch partner."
4-days ago, World Series umpires have FTX plastered all over them. Unreal. pic.twitter.com/twbVT0laxx
— Blockchain Backer (@BCBacker) November 9, 2022
With the Astros recently crowned World Series champions and the 2022 season coming to an end, Major League Baseball has not made a statement on the subject yet.
FTX and federal class-action lawsuit
On Wednesday, news broke that there will be several high-profile defendants in a federal class-action lawsuit filed against FTX.
The lawsuit stated that FTX needed big names like Brady "to continue funneling investors into the FTX Ponzi scheme, and to promote and substantially assist in the sale of the (accounts), which are unregistered securities.”
The lawsuit added that their "misrepresentations and omissions make them liable" following FTX's collapse.
“Plaintiffs and consumers in the (suit) have been aggrieved by Defendants’ unfair and deceptive practices and acts of false advertising by paying into the Ponzi scheme that was the Deceptive FTX Platform and in the amount of their lost investments."
Along with FTX CEO Bankman-Fried, Brady and his partner, Bundchen, the suit also named celebrities like Curry, NBA Hall of Famer Shaquille O'Neal, Red Sox legend David Ortiz, Angels superstar Shohei Ohtani and organizations like the Warriors and Mavericks.
