FTX, one of the biggest and best-known crypto exchanges in the world, has collapsed. An article in the Economist has made some damning observations about the impact that this may have on the crypto industry as a whole.
Additionally, there have also been reports that this could negatively impact the world of sports betting and crypto gambling. However, all might not quite be as bad as it initially appeared to be.
Big-spending crypto exchange giant, FTX, has seen a rapid decline over the past month. This has resulted in bankruptcy for the company, meanwhile, its founder, Sam Bankman-Fried, is now being investigated by prosecutors for his hedge fund-orchestrated trades.
Additionally, multiple million-dollar sponsorship deals have now essentially fallen off the edge of a cliff, never to be seen again. Oh, and some crypto investors are now planning to sue Tom Brady and Steph Curry over the collapse as well.
Alongside Crypto.com, FTX has been one of the biggest spenders in sports sponsorship deals in recent times. Over the past two years, the crypto exchange brand has gotten its name out there by plying money into major sports leagues and organizations, including the MLB, NBA and Formula One.
Perhaps most notably, FTX bought the naming rights to the home of Miami Heat, turning the American Airlines Arena into the FTX Arena. That deal, along with all other FTX sponsorship deals, has now vanished into thin air.
Millions of crypto investors are out of pocket, high-profile brand ambassadors have lawsuits pending and Miami Heat’s Arena has been left without a name.
As part of its free-spending sports investment, FTX onboarded some of the biggest names in US sports as brand ambassadors. The most famous of these being Tom Brady and Steph Curry – the former of which bought an equity stake, while the latter signed a partnership deal in September 2021.
Brady, Curry, and a host of other sports stars and celebrities have been sucked into the Bankman-Fried lawsuit. FTX stands accused of encouraging uninformed investors to put money into the platform. As ambassadors and investors in the crypto exchange, Brady and Curry have been caught up in the crossfire.
In addition to investing heavily in sports sponsorship, FTX also lined up some large investments with two sports betting companies – BetDex and PlayUp.
BetDex is a decentralized cryptocurrency sports betting exchange that was founded by former FanDuel CEO, Nigel Eccles and four others. PlayUp, meanwhile, is an Australian sports betting brand that has a licensed and regulated sportsbook in two US states – New Jersey and Colorado.
FTX invested in both platforms, leading many to believe that the downfall of the crypto exchange would negatively impact both sports betting companies. However, circumstances have come to light that appear to suggest that both BetDex and PlayUp could come out of this relatively unscathed.
According to BetDex CEO and co-founder, Varun Sudhakar, their investment from FedEx was secured well in advance of this month’s downfall. In a statement, he claimed that FTX was a participant in a seed investment round, and that the funds were fully transferred to them in November 2021.
He then went on to explain that the investment was to help create “a sports betting ecosystem where winners are welcome, fees are low, and users are always in control of their fund.”, before confirming that FTX’s bankruptcy hasn’t affected that at all.
While BetDex appears to have dodged the bullet by securing its investment well in advance of FTX’s decline, PlayUp seems to have been saved by its own incompetence.
FTX had already invested in PlayUp when it attempted to acquire the company in 2021. However, the sale never went through and the takeover never materialized.
The reason? We don’t exactly know, however, there is a lot of finger-pointing going on between those involved in the deal, most notably between the currency and former PlayUp CEOs.
Former PlayUp CEO, Laila Mintas, was initially accused of deliberately sabotaging the deal, and the company even filed a lawsuit against her. Mintas retaliated by filing a counterclaim against current CEO, Daniel Simic, saying that he was actually the person responsible for sabotaging the deal.
Whatever the outcome may be, it now appears that the failed sale was a blessing in disguise for PlayUp.
Cryptocurrency has seen plenty of major setbacks over the past decade, including the infamous Bitcoin crash of 2017. Until now, cryptocurrencies and intertwined sports betting companies have always managed to bounce back.
Many industry experts, including Thawfeek Ameen, chief marketing officer at Betswap, agree that while it is a major setback, it won’t have too much of an impact overall. The likes of stake.com are here to stay and that is for a reason. Players love what crypto gambling has to offer which has been perfectly pointed out by bitstacker.com in one of their latest reviews about stake.com.
Players must be 21 years of age or older or reach the minimum age for gambling in their respective state and located in jurisdictions where online gambling is legal. Please play responsibly. Bet with your head, not over it. If you or someone you know has a gambling problem, and wants help, call or visit: (a) the Council on Compulsive Gambling of New Jersey at 1-800-Gambler or www.800gambler.org; or (b) Gamblers Anonymous at 855-2-CALL-GA or www.gamblersanonymous.org.
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