FTX Group, once a notable entity in the crypto industry, finds itself in a pickle as it assesses if millions paid to celebrities and athletes before its demise can be recovered. The recent disclosures provide insights into FTX’s celebrity endorsement strategy. Here’s a comprehensive breakdown.
FTX Endorsement Deals under Scrutiny
Financial advisers from FTX recently revealed in court documents their evaluations about recovering certain payments made before the firm’s catastrophic event last November. Some of these payments directed at basketball legend Shaquille O’Neal and tennis sensation Naomi Osaka are now under investigation. Specifically, the advisers are determining if these payments fall under Chapter 11 rules allowing companies to reverse pre-bankruptcy transactions.
The new revelations may not wholly encapsulate FTX’s expenditure on celebrity endorsements, but they certainly shed light on how FTX bolstered its reputation using notable figures. Their associations spanned from Major League Baseball (MLB) to National Basketball Association (NBA) teams and even Formula 1.
While the exact amount of recoverable payments remains uncertain, and whether any parties have already proposed repayments is unknown, FTX has clarified many of these transactions. They often relate to advanced advertising or sponsorship contracts. However, FTX warned that their financial data might still lack thoroughness, highlighting the absence of “detailed historical amortization information”.
Financial Discrepancies and Bankruptcy Implications
John J. Ray III, the new CEO of FTX, voiced concerns when declaring Chapter 11, pointing to unreliable financial data and incomplete records. Moreover, some beneficiaries might have withdrawn or offset their deposits before the bankruptcy declaration. FTX mentioned that some parties tried returning funds for customer and creditor benefits, but the actual recovered amount could vary from their statements.
Among the disclosed expenditures:
- MLB received approximately $4.9 million, with umpires having to sport FTX’s logo once.
- Formula 1 racing team Mercedes-AMG Petronas was tied to a $12.2 million agreement.
- NBA’s Golden State Warriors received around $3.4 million, and Stephen Curry’s venture, SC30 Inc., obtained nearly $242,000.
Both FTX and Mercedes-Benz Grand Prix Ltd. representatives refrained from commenting, and lawyers for renowned figures like O’Neal, Osaka, and Curry, among others, remained unresponsive.
FTX hinted that some Formula 1-related payments might be reversed during the Chapter 11 proceedings. Alvarez & Marsal, FTX’s financial adviser, is also exploring reversing the payments to the Golden State Warriors. Intriguingly, the Warriors received $2 million shortly before FTX’s bankruptcy. Mercedes also chose to halt its FTX partnership around the same time.
Ongoing Litigations and Denials
Post these disclosures, FTX’s revamped leadership sued a venture capital firm, accusing it of introducing Bankman-Fried to NBA celebrities. Athletes and teams that once endorsed FTX, including prominent names like O’Neal, Osaka, and the Warriors, have refuted claims alleging them of investor losses.
FTX’s disclosures also highlighted their associations with other sportspersons:
- Trevor Lawrence, Jacksonville Jaguars quarterback, reportedly received $500,000 in 2022.
- Retired Boston Red Sox’s David Ortiz and his child heart surgery charity secured around $600,000.
- NBA’s Washington Wizards and the Miami Heat also feature in FTX’s payment list, indicating the breadth of FTX’s celebrity endorsements.
The post FTX Group Aims To Claw Back Celebrity Endorsements and Recoverable Payments appeared first on CryptoMode.
