Cryptocurrency Exchange FTX on the Hook for $16.5 Million After Arena Sponsorship Falls Through

If you have seen the headlines online, in the papers, or on the evening news lately, then you have likely heard about the crypto crash. The cryptocurrency exchanges have become a wasteland for many people’s investments. This has frustrated many former crypto fans – and devastated many others. 

The collapse of one exchange, in particular, has led to a major headache for local basketball organization the Miami Heat. What does the crypto crash have to do with Florida basketball and a rise in recent bankruptcies? It all comes down to decisions made while markets were up – and what happens when they come crashing back to earth. 

Cashing in on the Crypto Craze in the Miami Heat

During the Superbowl of 2021, many fans noticed the uptick in marketing for businesses related to cryptocurrency. That connection was no coincidence; major exchanges and related organizations were heavily targeting sports fans. 

This marketing reached even greater heights when sports teams like the Miami Heat began selling naming rights to their facilities to exchanges and cryptocurrency organizations. March 2021 saw the Miami Heat renaming their facility ‘FTX Arena’. For many fans, it was the first time that they had heard of the FTX crypto exchange.

It would not be the last, though. 

The initial deal was valued at over $135 million, with the name intended to remain in place until 2040. FTX quickly became a household name for many sports fans, with the exchange’s logo appearing on uniforms, on advertisements, and even on sponsored racing vehicles. For those with an optimistic view of the future of cryptocurrency, it seemed like a great collaboration for everyone involved. 

A Short-Sighted Deal

While the collaboration between the popular cryptocurrency exchange and the sports team may have seemed like a brilliant one at the time, it did not take long for problems to become evident. 

The crypto market has been in decline for well over a year, now. It seemed that almost as soon as the ink was dry on the deal for renaming the arena, the FTX exchange and others began to show signs of struggle. Uncertain economic times and the ongoing fallout from the COVID-19 pandemic have left many people unable to continue risking money for investments, which has left many exchanges in a downward spiral of value. 

In the case of FTX, news broke on November 11^th, 2022 that the entire exchange and related entities would be filing for bankruptcy. As soon as this news broke, Miami-Dade County – the owners of the arena – shared that they would end their partnership with the exchange and begin seeking a new naming rights partner. 

As part of the contract originally signed with the county, the exchange and related entities are still obligated to pay a large sum to the county as a result of the original deal falling through. With over $16.5 million still owed to the county, it is a soured deal that is sending waves through both the world of sports and the communities that surround cryptocurrency. 

Many sports fans worry about what this will mean for other organizations that have partnered with crypto exchanges or organizations. Things are currently both unstable and uncertain. Only time will tell if this is the first of many similar stories. 

The Bigger Crypto Crash Picture

All of this is a sad piece of a much larger – and more complicated – puzzle. While investing is always risky and markets can fluctuate, few markets have ever been more volatile than cryptocurrency exchanges in recent years. While 2020 had many people riding high in these exchanges and cashing out thousands or even millions of dollars in returns, the last 24 months have seen much of that success ripped away from investors. 

You need look no further for an example of this than the fallout from investments in NFT artwork. This digital artwork – or non-fungible token, as the abbreviation indicates – was seen as a risky but exciting investment just two years ago. Many fans hailed these investments as the next big thing, and everyone from celebrities to everyday people were pouring thousands of dollars into securing these digital files. 

In recent months, though, the value of these investments has fallen to a remarkable low. NFTs sold for hundreds of thousands of dollars are now worth a few hundred or even less. The celebrity spokespeople who touted these pieces as a great investment just two years ago are now interestingly silent on the value of their pieces – or whether they even still own them. 

While that is frustrating, the far bigger problem is that many major companies began accepting payment for goods or services in digital currencies such as Bitcoin. These currencies are now far less valuable, with some exchanges like FTX now essentially worthless. People or businesses who received payment in these currencies are now out thousands or millions of dollars. Athletes, actors, singers, and major corporations alike are now sitting on digital treasure chests that are worth exponentially less than they originally were. 

The crypto crash has taught novice investors that sinking serious money into volatile markets is not something to take lightly – or model for followers and fans. 

Should You Seek Legal Help for Cryptocurrency Losses?

Wealthy corporate interests, organizations, and billionaires have not been the only people who have been victimized by the crypto crash. Many everyday Floridians saw the initial success of those investing in cryptocurrency and wanted to join in on the trend to see some of that return themselves. Unfortunately, these average Americans have been left in a much worse financial position as a result of the fallout than big businesses and billionaires. 

What can you do if you are suffering financially due to the crypto crash? While it might feel like you have no options, speaking to a Florida bankruptcy attorney can help you make a plan for the future that makes sense for you and your family. 

At the Van Horn Law Group, our experienced team is well-versed in helping families just like yours get a fresh financial start. Whether you lost a little or are still losing a lot due to the ongoing crypto crash, contact us today. Our team can help you determine what your next steps should be – and guide you through every one!