FTX is trying to recover the millions of dollars paid to celebrity athletes and sports teams who endorsed the now-bankrupt cryptocurrency exchange before its collapse. It is also reclaiming the investments it made in other companies, including crypto startups.
FTX’s Hefty Payments to Athletes
According to a court filing, the financial advisors of FTX have laid out a detailed list of names and businesses to assess the possibility of reversing the payments made to them under the collapsed exchange’s marketing efforts.
The list includes $750,000 of payments made to the former basketball professional Shaquille O’Neal, more than $300,000 and $270,000 to the Tennis player Naomi Osaka and the former baseball star David Ortiz, respectively, as well as a payment of over $200,000 to the American football quarterback Trevor Lawrence. The list added a payout of about $420,000 to the professional basketball team, the Golden State Warriors, and another payment of over $250,000 to Miami Heat.
At its peak of marketing spending, FTX bought the naming rights of the Miami Heat arena, which shed the crypto exchange’s branding following its collapse. The exchange was promoted by other high-profile names like Tom Brady, supermodel and his former wife Gesel Bundchen, the comedian Lary David, and more.
Most of these celebrities have been named in class action lawsuits brought by former FTX customers whose funds are now stuck in bankruptcy proceedings.
Despite the name mentions, the flailing highlighted that the recovery amount “may vary materially from the amount reported.”
FTX collapsed last November after the business misdeeds by its top management came to light. FTX’s Founder and former CEO, Sam Bankman-Fried, faces civil and criminal lawsuits and is currently behind bars, awaiting trial. Several of his associates at FTX had pled guilty to the charges and are cooperating with the investigators.
Investment Recovery
Meanwhile, the bankrupt crypto exchange filed a lawsuit against LayerZero Labs, a cross-chain protocol, seeking the recovery of an investment of $21 million. The lawsuit alleged that LayerZero Labs illegally withdrew the funds before FTX’s collapse despite knowing the liquidity crunch of the exchange.
“LayerZero was well aware that Alameda Research was facing a liquidity crisis and, within about 24 hours, negotiated a fire-sale transaction with Caroline Ellison, Alameda Research’s then-CEO,” the lawsuit alleged.
The agreement with LayerZero was signed by Alameda Ventures, the venture capital arm of FTX Research, a sister company of FTX. Alameda initially paid $70 million in two transactions to the crypto startup for about a stake of 4.92 percent and paid another $25 million for 100 million STG tokens at a public auction.
put simplywe did indeed buy all of the tokens (back)better is better- RAZ & Bryan https://t.co/anBSloYRLV
— raz (@ryanzarick) November 10, 2022
In addition to that, LayerZero loaned $45 million to Alameda Research. However, when the crisis of FTX started, LayerZero sought a deal to return its stake owned by Alameda and agreed to forgive the $45 million loan. In another agreement, the cross-chain protocol agreed to purchase 100 million STG tokens for $10 million, which remained incomplete.
This article was written by Arnab Shome at www.financemagnates.com.
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