In a significant development in the ongoing legal saga surrounding the defunct cryptocurrency exchange FTX, a new lawsuit has been filed implicating major sports entities. The Mercedes-AMG Petronas Formula One Team and Major League Baseball (MLB) face allegations of complicity in what is described as a multi-billion-dollar fraud orchestrated by FTX. This lawsuit, filed on November 27 in a Florida district court, represents a widening legal net seeking accountability from those beyond the core financial players involved.
Promotional deals under scrutiny
The class-action lawsuits filed by a group of FTX users allege that the Mercedes-AMG Petronas F1 Team and MLB bolstered FTX’s reputation, aiding in the alleged fraud. In 2021, the Mercedes F1 team entered into a promotional deal with FTX, leading to the widespread display of the exchange’s logo on team cars, uniforms, and other merchandise. Similarly, MLB’s agreement with FTX in the same year marked a historic move, being the first pro sports league to endorse a crypto exchange. This deal included FTX.US patches on MLB umpire uniforms, a first in the league’s long history.
The legal complaints emphasize the significance of these partnerships in lending credibility to FTX. According to the plaintiffs, the visibility of exchange’s branding in high-profile sporting events and merchandise was instrumental in creating an illusion of trustworthiness around the crypto exchange. They argue this was a crucial element in the alleged scheme to defraud users.
In addition to the sports entities, the lawsuit encompasses celebrities with promotional ties with the cryptocurrency exchange. High-profile figures such as Shaquille O’Neal and Tom Brady are mentioned, facing similar accusations of promoting unregistered securities. While several celebrities have sought to dismiss the lawsuits against them, claiming no encouragement of financial investment with the exchange, a few have settled, including Trevor Lawrence, Kevin Paffrath, and Tom Nash.
This legal action follows the conviction of the exchange’s founder and former CEO Sam Bankman-Fried on charges including fraud and money laundering earlier in the month, a significant moment in the unraveling of the FTX saga.
Sports entities sever ties with FTX
In response to the unfolding scandal and FTX’s subsequent bankruptcy filing in November 2022, Mercedes F1 and MLB terminated their agreements with the crypto exchange. Mercedes F1 quickly removed FTX’s branding from its cars and merchandise, a clear move to distance itself from the now-discredited company. Similarly, MLB abandoned its five-year contract with the exchange, marking an abrupt end to a partnership that was once seen as a groundbreaking foray into cryptocurrency.
The inclusion of such high-profile sports organizations in the legal proceedings against the platform underscores the far-reaching impact of the exchange’s collapse. It raises critical questions about major brands’ responsibilities and due diligence when entering into promotional agreements, especially in cryptocurrency’s volatile and relatively uncharted waters.
As the legal battles continue to unfold, the sports world, the crypto industry, and the public will be watching closely. The outcomes of these lawsuits could set significant precedents regarding corporate endorsements and the accountability of promotional partners in cases of financial malfeasance.
