FTX Looking to Recover Millions Paid to Athletes and Sports Clubs – The financial consultants employed by FTX’s current leadership have assessed the potential for reclaiming substantial sums of money disbursed to professional athletes, sports franchises, and organizations that endorsed the cryptocurrency exchange before its downfall last fall.
These funds were directed towards notable sports figures, including basketball icon Shaquille O’Neal, as well as sports teams like the Miami Heat from the NBA and the Mercedes Formula 1 team, as part of sponsorship and advertising agreements. According to court documents cited by Bloomberg, experts have examined payments made to former National Basketball Association (NBA) player Shaquille O’Neal (Shaq), tennis sensation Naomi Osaka, and others.
This is to assess the possibility of reversing these transactions under regulations applicable to dealings conducted just before the filing of Chapter 11. FTX, headquartered in the Bahamas and once among the largest cryptocurrency exchanges, sought bankruptcy protection in the United States in November 2022 due to liquidity challenges. Its founder and former CEO, Sam Bankman-Fried (SBF), is scheduled to face trial in October on charges including fraud.
These payments to athletes and sports leagues were intended to enhance the reputation of the cryptocurrency exchange. As per the advisers, many of these payments were upfront funds for advertising or sponsorship agreements with entities such as Major League Baseball (MLB) and NBA teams. While FTX noted that the advisers’ disclosures may not be complete, they show that around $4.9 million were transferred to MLB. an
Another $12.2 million were linked to partnership agreements with Formula 1 racing team Mercedes-AMG Petronas, and $3.4 million were paid to the NBA’s Golden State Warriors. In August 2022, an affiliate company of FTX made a payment of $2.5 million to a subsidiary of Authentic Brands Group linked to O’Neal, as part of a total payment of $4.3 million for Shaq and his company.
Additionally, around $2 million was reportedly paid to Osaka in early November, shortly before FTX filed for bankruptcy, making up approximately $3.2 million in payments related to partnership and endorsement agreements for the tennis star. Court documents also mention several other athletes and sports teams, including Trevor Lawrence of the Jacksonville Jaguars, retired Boston Red Sox player David Ortiz, and the NBA’s Washington Wizards and the Miami Heat.
Some of these payments were made roughly a month before FTX filed for Chapter 11 bankruptcy. These disclosures have emerged following legal actions taken by the new management of FTX against a venture capital firm that allegedly connected Bankman-Fried to NBA stars and other celebrities. O’Neal, Osaka, and the Warriors, among other athletes and teams, have denied any responsibility for the losses incurred by investors in their lawsuits.
In July, FTX also filed a lawsuit against Bankman-Fried and former FTX executives in an effort to recover over $1 billion. SBF has been accused of diverting billions of dollars in FTX customers’ funds to purchase high-value properties, make political donations, and finance other businesses, such as the hedge fund Alameda Research.