Mercedes F1 announced the suspension of the Formula 1 sponsorship deal with cryptocurrency exchange FTX following its Chapter 11 bankruptcy filing. The suspension Mercedes could be one of many sports sponsors to be canceled after signing FTX lucrative sports offers valued at hundreds of millions of dollars.
“As a first step, we have suspended our partnership agreement with FTX,” Mercedes said, according to Autosport. “This means that the company will no longer appear on our race car and other branded assets from this weekend. We will continue to monitor developments closely.”
Prior to its collapse, FTX made big sports bets to gain exposure, especially in the United States. In 2022, FTX has partnered with leagues and players across multiple sports, including big names such as the NBA Warriors, Miami Heatthe MLBand MLB star player Shohei Ohtani. The sponsorships were high value, with the Miami Heat stadium naming rights valued at $135 million over 19 years. Friday, Miami Heat and Miami-Dade County said they were ending the affair. Thus, the collapse of FTX has a major impact on customers and also places some of its partners in the sports industry in a precarious position.
The FTX disaster has also prompted increased scrutiny and calls for transparency for other crypto companies. This weekend, crypto exchange Crypto.com acknowledged that the exchange mistakenly sent around $400 million in October to rival exchange Gate.io, which was later recovered. Although much smaller than FTX, Crypto.com has made even larger investments in sports sponsorship, including the 2022 FIFA World Cup, making Crypto.com a exclusive cryptocurrency trading platform for the biggest sporting event of this year. He also had a naming rights deal for a sports arena, which was valued at $700 million. And he has a $100m deal with F1 organizers, among others.
In the case of FTX, sports sponsorship was cited as a competitor as a red flag. Jesse Powell, CEO of cryptocurrency exchange Kraken, called “huge ego buys, like 9-fig sports deals,” a red flag in a wire. tweet. “The damage here is enormous,” Powell continued. “An exchange implosion of this magnitude is a gift to bitcoin haters everywhere… We will be working to undo this for years to come.”
These are not the first crypto sponsorships to be canceled. Earlier in 2022, Formula 1 team McLaren Racing, football teams Sporting Lisbon and Italian Spezia terminated their sponsorship deals with Turkish crypto firm Bitci. Reports pointed out that Sporting Lisbon’s decision was due to Bitci’s non-payment.