FTX files for bankruptcy, leaving TSM’s expansion plans in doubt
Cryptocurrency exchange FTX, which penned a naming rights deal with TSM in 2021, has filed for bankruptcy protection in the United States.
In a statement on Twitter, FTX said that the company’s founder, Sam Bankman-Fried, had resigned as CEO, though he will remain “to assist in an orderly transition”. John J. Ray III has been named the new CEO.
The announcement came after a week of turmoil for FTX, widely regarded as one of the safest companies in the volatile crypto industry. At the time of writing, it has fallen from being the second-largest crypto exchange to 96th, according to CoinMarketCap.
“I’m really sorry, again, that we ended up here,” Mr. Bankman-Fried wrote on Twitter. “Hopefully things can find a way to recover. Hopefully, this can bring some amount of transparency, trust, and governance to them.”
On November 8, Binance, the world’s largest crypto exchange, signed a non-binding letter of intent to acquire FTX and help cover the company’s liquidity crunch. But just a day later, it announced that it was walking away from the deal after reviewing FTX’s financial documents.
“In the beginning, our hope was to be able to support FTX’s customers to provide liquidity, but the issues are beyond our control or ability to help,” Binance said.
FTX’s collapse could have a significant impact on a number of esports companies, especially TSM, with which it signed in 2021 a ten-year naming rights deal worth $210 million. The agreement was described as the “largest in esports history” by TSM, which became known as “TSM FTX”.
When announcing the partnership with FTX in June 2021, TSM said that it would invest resources “into esports and gaming over the next five years”. One of the organization’s targets was to “accelerate existing global reach” by opening several offices across the planet, including in Asia, Europe and South America.
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In October 2022, Dominic Kallas, Vice President of Esports at TSM, announced that the organization was returning to CS:GO in 2023, more than five years after leaving the esport. In a subsequent interview with Dexerto, Kallas said that the move was part of TSM’s expansion plans as it looks to build “a strong footprint within Europe”. It remains unclear whether those plans are still viable following FTX’s downfall.
Marty Conway, an adjunct professor of sports management at Georgetown University, told The New York Times that if FTX misses payments, teams and organizations that are partnered with the crypto exchange might resort to litigation.
TSM did not immediately respond to requests for comment.
In August 2021, FTX also became the official cryptocurrency exchange of the League of Legends Championship Series (LCS) in a seven-year deal. Earlier this year, it signed a one-year sponsorship agreement worth $3.2 million with Brazilian organization FURIA.