FTX Looking to Recover Millions Paid to Athletes and Sports Clubs

FTX Looking to Recover Millions Paid to Athletes and Sports Clubs

Advisers working for FTX have analyzed if some payments made by the failed crypto exchange to sports stars and organizations can be returned. The money went to celebrity athletes, including basketball legend Shaquille O’Neal, and sports teams like the NBA’s Miami Heat and Formula 1’s Mercedes under sponsorship and advertising deals.

FTX Advisers Review Payments to O’Neal, Naomi Osaka and Others

Financial advisers hired by the new management of FTX have examined the possibility of recovering millions of U.S. dollars paid to professional athletes, sports clubs, and associations that promoted the digital asset exchange before it collapsed last fall.

Court documents quoted by Bloomberg reveal that the experts have reviewed payments to former National Basketball Association (NBA) player Shaquille O’Neal (Shaq) and tennis star Naomi Osaka among others to determine if these can be reversed under rules that apply to transactions made just before a Chapter 11 filing.

The Bahamas-headquartered FTX, which was one of the largest cryptocurrency exchanges, filed for bankruptcy protection in the U.S. in November 2022 amid liquidity issues. Its founder and former CEO, Sam Bankman-Fried (SBF), awaits the start of his trial on fraud and other charges in October.

The payments to athletes and sports leagues were made to elevate the profile of the cryptocurrency exchange. According to the advisers, many of these were prepayments for advertising or sponsorship deals with organizations such as Major League Baseball (MLB) and NBA teams.

While FTX noted that the advisers’ disclosures may not be complete, they show that around $4.9 million were transferred to MLB, another $12.2 million were linked to partnership agreements with Formula 1 racing team Mercedes-AMG Petronas, and $3.4 million were paid to the NBA’s Golden State Warriors.

Some Payments Were Made Days Before FTX Filed for Bankruptcy

In August 2022, an FTX affiliate company paid $2.5 million to a subsidiary of Authentic Brands Group affiliated with O’Neal, part of a $4.3 million in total payments for Shaq and his company. Another $2 million was reportedly paid to Osaka in early November, days before FTX filed for bankruptcy, out of a total of around $3.2 million in payments for the tennis star under partnership and endorsement deals.

Other athletes and sports teams mentioned in the court documents include Jacksonville Jaguars quarterback Trevor Lawrence, retired Boston Red Sox slugger David Ortiz as well as NBA’s Washington Wizards and the Miami Heat. Some of these payments were made about a month before FTX’s Chapter 11 filing.

The report notes that the disclosures come after the new management of FTX sued a venture capital firm that allegedly connected Bankman-Fried to NBA stars and other celebrities. O’Neal, Osaka, and the Warriors among other athletes and teams have denied in lawsuits responsibility for losses suffered by investors.

In July, FTX also sued Bankman-Fried and other former FTX executives in an attempt to regain over $1 billion. SBF has been accused of diverting billions of dollars in FTX customers’ funds to buy expensive property, make political donations, and finance his other businesses such as the hedge fund Alameda Research.

Do you think FTX will manage to recover some of the payments made to athletes and sports organizations? Tell us in the comments section below.

Read on bitcoin.com

Please enter CoinGecko Free Api Key to get this plugin works.