Investors who allege to have lost $11 billion in the FTX cryptocurrency exchange collapse are now suing major sports entities. According to a recent Bloomberg report, Major League Baseball, Formula 1 racing, and Mercedes-Benz Group AG’s racing team have been dragged into the legal fray, accused of aiding and abetting what is described as a “massive, multi-billion-dollar global fraud.”
The lawsuit, filed in a Miami federal court, targets these sports giants for their promotional partnerships with FTX. Notably, MLB, the first major sports league to ink a deal with FTX in 2021, even had umpires sporting FTX patches. This legal action is an extension of a broader class-action suit that includes over two dozen celebrities, such as Tom Brady and Steph Curry, accused of promoting unregulated securities through FTX endorsements.
The lawsuit claims sports entities and celebrities ignored FTX’s red flags, attracted by quick profits in the crypto market. The investors argue that these endorsements were significant in bolstering FTX’s credibility and contributed to the public’s enthusiasm for crypto.
Sports leagues and teams remain silent on the lawsuit, while celebrity endorsers defend their actions in court. They contend their promotions didn’t explicitly encourage investment in FTX and deny any role in the mismanagement of investor funds.
After FTX’s collapse, MLB and the Mercedes Formula 1 team have both severed their ties with the crypto exchange. MLB canceled its five-year promotional deal in 2022, and Mercedes removed FTX logos from its racing cars.
Implications for sports and crypto marketing
This lawsuit marks a significant moment in the scrutiny of sports marketing’s role in financial products, particularly in the volatile cryptocurrency sector. It raises questions about the responsibility and influence of sports entities and celebrities in endorsing financial products and services.
Observers will closely watch the case’s progress in the U.S. District Court for the Southern District of Florida for its potential impact on the relationship between sports, entertainment, and finance. The outcome may establish a precedent for the perception and regulation of sports marketing deals, particularly in the high-stakes world of cryptocurrency.