FTX Seeks Payments Recovery from Top Athletes and Clubs

<p>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.
</p><p>FTX’s Hefty Payments to Athletes
</p><p>According to a court filing, the financial advisors of <a href="https://www.financemagnates.com/tag/ftx/">FTX</a> 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.
</p><p>The list includes $750,000 payments made to former basketball professional Shaquille O’Neal, more than $300,000 and $270,000 to Tennis player Naomi Osaka and former baseball star David Ortiz, respectively, and a payment of over $200,000 to American football quarterback Trevor Lawrence. The list further added a payout of about $420,000 to the professional basketball team, the Golden State Warriors, and another over $250,000 paid to the Miami Heat.</p><p>At its peak of <a href="https://www.financemagnates.com/terms/m/marketing/">marketing</a> spending, FTX bought the <a href="https://www.financemagnates.com/cryptocurrency/news/crypto-exchange-ftx-expands-base-to-miami-as-us-demand-rises/">naming rights of the Miami Heat arena</a>, which shed the crypto exchange’s branding following its collapse. The exchange was also promoted by other high-profile names like Tom Brady, supermodel and his former wife Gesel Bundchen, comedian Lary David, and more.
</p><p>Most of these celebrities have also been <a href="https://www.financemagnates.com/cryptocurrency/can-ftxs-sports-partners-be-held-accountable-for-bankman-frieds-alleged-fraud/">named in class action lawsuits </a>brought by former FTX customers, whose funds are now stuck in <a href="https://www.financemagnates.com/terms/b/bankruptcy/">bankruptcy</a> proceedings.
</p><p>Despite the name mentions, the flailing highlighted that the recovery amount “may vary materially from the amount reported.”
</p><p>FTX, once one of the top crypto exchanges, 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 its associates at FTX had <a href="https://www.financemagnates.com/cryptocurrency/ftxs-salame-set-to-plead-guilty-after-prolonged-negotiations-with-prosecutors-report/">pled guilty </a>to the charges and are cooperating with the investigators.
</p><p>Investment Recovery
</p><p>Meanwhile, the bankrupt crypto exchange filed a lawsuit against LayerZero Labs, a cross-chain protocol, seeking the recovery of a $21 million investment. The lawsuit alleged that LayerZero Labs illegally withdrew the funds before FTX’s collapse despite knowing the liquidity crunch of the exchange.
</p><p>“LayerZero was well aware that Alameda Research was feacing a liquidity crisis and, within about 24 hours, negotiated a fire-sale transaction with Caroline Ellison, Alameda Research’s then-CEO,” the lawsuit alleges.
</p><p>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 4.92 percent stake and paid another $25 million for 100 million STG tokens at a public auction.</p><blockquote><p lang="en" dir="ltr">put simplywe did indeed buy all of the tokens (back)better is better- RAZ &amp; Bryan <a href="https://t.co/anBSloYRLV">https://t.co/anBSloYRLV</a></p>— raz (@ryanzarick) <a href="https://twitter.com/ryanzarick/status/1590765802281906177?ref_src=twsrc%5Etfw">November 10, 2022</a></blockquote><p>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.
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This article was written by Arnab Shome at www.financemagnates.com.