In a recent report, the court presiding over the criminal trial of former FTX exchange CEO Sam Bankman-Fried had revealed more evidence of customers’ funds misappropriation as it discovered a huge investment of $100 million FTX invested in Riot Games as a sponsorship deal before the crypto collapsed in November 2022.
According to the new development, the FTX exchange, which was once a prominent cryptocurrency platform before it became insolvent last year, reportedly engaged in several sponsorship deals worth millions of dollars while it was still operational. The discovery about the multiple values surfaced during the trial of the firm’s former CEO, Bankman-Fried, for several criminal charges.
The report showed that the recent sponsorship deal FTX allegedly engaged in was with Riot Games, the crooner of League of Legends Championship Series (LCS), which is a prominent game. According to the report, FTX invested a whopping $100 million in Riot Games as part of its sponsorship deal in the LCS esports tournament.
FTX Invested $100 Million To Riot Games
Furthermore, the report shows that the truth behind the hefty deal was uncovered during SBF’s fraud trial proceedings in a federal court in New York City. The disclosure unravels all the hidden sums the firm spent on sponsorship deals. Also, the report claimed that the seven-year-long agreement between Riot Games and FTX was signed in 2021 and was designed to automatically renew in 2028 unless one of the two parties lodged a complaint.
In addition, the prosecution team presented FTX’s spreadsheet to back up their claims of illegal sponsorship deals, which they alleged FTX used its customers’ money to run. According to the spreadsheet, the agreement mandated Riot’s LCS to receive $4 million and $12.5 million in 2021 and 2022, respectively. In 2023, the gaming firm will receive about $12.8 million as a sponsorship deal, and the annual recurring payment will continue till 2028, as reportedly agreed by the two firms.
FTX Made Multiple Sponsorship Deals
Meanwhile, another report revealed that before FTX collapsed, it had agreed to fund the TSM esport organization with hefty donations, including $73.6 million and $136.6 million, both tagged as “FTX US” and “FTX Trading,” respectively. The deal, which totaled $210 million, was made over a 10-year deal in 2021. TSM was programmed to receive $10.8 million, $15.37 million, and $16.7 million in 2021, 2022, and 2023 respectively.
Currently, the amount FTX exchange had disbursed to Riot Games and TSM before it collapsed last year is unclear. Nonetheless, reports showed that Bankman-Fried was fund of Riot Game’s League of Legends as he was publicly advocating for the game, discussing it on media platforms, and playing it during meetings and gatherings. He humorously remarked on a tweet in 2021 where he joked about playing the game while on phone calls.
The League of Legends is a prominent game leading the chart of the too popular competitive esports games. The game reportedly has about 133. million customers are actively playing it every month.
Esports Industry Embraces Crypto
The game, which has grown quite famous, has significantly helped to facilitate the adoption of crypto and blockchain innovations to generate income. Initially, Esports firms often struggle with financial difficulties and being profitable; however, the industry currently utilizes the advantages of crypto sponsorships as a significant source of revenue for its operation.
Furthermore, the report showed that many esports firms rely on sponsorship agreements to sustain their businesses while others like M80 and TSM reportedly explore other engagement strategies like non-fungible tokens and crypto integration to gather more clients and generate more income.
Nonetheless, the bright burning flame of the partnership between the esports and NFT has reportedly dwindled recently. The bearish crypto market condition of the country is a key factor towards the financial challenges the sector faces. But the corroboration between the esports industry and the crypro industry never cease to create interactive space where they both want mutual gains and new revenue streams.
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