Investors who claim to have lost $11 billion in the collapse of the FTX cryptocurrency exchange have filed a lawsuit against major sports entities. According to a recent Bloomberg report, Major League Baseball, Formula 1 racing, and Mercedes-Benz Group AG’s racing team are being accused of involvement in 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. MLB, the first major sports league to enter into a deal with FTX in 2021, even had umpires wearing FTX patches. This legal action is part of a broader class-action suit that involves over two dozen celebrities, including Tom Brady and Steph Curry, accused of promoting unregulated securities through FTX endorsements.
The investors argue that these endorsements played a significant role in bolstering FTX’s credibility and contributing to the public’s enthusiasm for crypto. They claim that sports entities and celebrities ignored warning signs about FTX, attracted by quick profits in the crypto market.
Sports leagues and teams have not commented on the lawsuit, while the celebrity endorsers are defending their actions in court, stating that their promotions didn’t explicitly encourage investment in FTX and denying any involvement in the mismanagement of investor funds.
Following FTX’s collapse, MLB and the Mercedes Formula 1 team have ended their partnerships 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 represents a significant moment in the examination of the role of sports marketing 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.
The progress of the case in the U.S. District Court for the Southern District of Florida will be closely monitored for its potential impact on the relationship between sports, entertainment, and finance. The outcome may set a precedent for the perception and regulation of sports marketing deals, particularly in the high-stakes world of cryptocurrency.
