FTX Group advisers have been examining whether it can recover millions of dollars given to Shaquille O’Neal, Naomi Osaka, and other professional athletes and teams that endorsed Sam Bankman-Fried’s cryptocurrency platform before its failure.
Financial advisors retained by FTX acknowledged in court documents that they had examined whether certain payments made to athletes before the collapse of the company last November could be recouped through Chapter 11.
According to court records, advisors have examined payments made to O’Neal, Osaka, and other individuals to ascertain if the transfers are covered by regulations that allow businesses to undo transactions made immediately before a Chapter 11 filing.
The latest disclosures, while not a full accounting of FTX’s spending on endorsements, provide the clearest picture yet of how Bankman-Fried’s company raised its reputation by leveraging the fame of famous athletes, Major League Baseball, National Basketball Association teams, and Formula 1.
It was impossible to find out whether FTX advisers think all of the payments can be recouped or whether any sportspeople or teams have already offered to refund payments. Many transfers to athletes, clubs, and leagues are referred to in FTX’s disclosures as prepayments for advertising or sponsorship contracts.
FTX warned that the financial disclosures would not be comprehensive because the company lacked “detailed historical amortization information” and could be further altered in the future.
According to John J. Ray III, the new chief executive officer of FTX, the company didn’t keep complete books and records and lacked reliable financial information when it filed for Chapter 11 bankruptcy.
The business added that it’s also possible that athletes, teams, or other parties either withdrew or offset deposits prior to FTX declaring bankruptcy.
In December, FTX said that a number of companies it had paid had made an effort to repay money for the benefit of clients and other creditors. FTX warned that the prepayments and deposits it ultimately recovers could not match the figures the business disclosed.
The cryptocurrency exchange confirmed that it had paid out about $4.9 million to MLB, which had once mandated that umpires wear patches with FTX’s insignia, and at least $12.2 million in connection with cooperation deals with Mercedes-AMG Petronas, a Formula 1 racing team.
The Golden State Warriors of the NBA received $3.4 million in payments through the platform, and SC30 Inc., the company owned by star player Stephen Curry, received close to $242,000 in payments.
According to the company, Alvarez & Marsal, FTX’s financial counsel, has examined whether payments to the Golden State Warriors could also be undone. FTX stated that at least a portion of the Formula 1-related payments could potentially be revoked in Chapter 11.
As per the court records , $2 million was wired to the Warriors just one month prior to FTX declaring bankruptcy. Just before FTX filed for bankruptcy, Mercedes made an announcement that it would cease its partnership.
The revelations follow FTX’s new management’s lawsuit against a venture capital firm for allegedly helping Bankman-Fried make connections with NBA players and other celebrities. In lawsuits accusing them of causing investor losses, athletes and organizations that supported FTX, such as O’Neal, Osaka, and the Warriors, have denied wrongdoing.
West Realm Shires Services Inc., an entity of FTX, reported paying $2.5 million to an O’Neal-affiliated division of Authentic Brands Group in August 2022. Two days before Bankman-Fried quit as CEO and his business filed for bankruptcy on November 9, 2022, the same FTX affiliate claimed to have paid Osaka $2 million.
According to court records , the payments are part of about $4.3 million in payments that FTX attributes to O’Neal and his ABG company, as well as roughly $3.2 million that the company said it paid to Osaka in connection with FTX partnership and endorsement relationships.
The quarterback for the Jacksonville Jaguars, Trevor Lawrence, was one of the sportsmen mentioned in FTX’s disclosures.
FTX claimed that Lawrence received a $500,000 payment in September 2022. A little over $600,000 in payments to retired Boston Red Sox slugger David Ortiz and his foundation, which supports heart operations for young patients in the Dominican Republic and New England, were also disclosed by FTX.
Payments totaling over $1.2 million to the NBA’s Washington Wizards and club owner Monumental Sports and Entertainment, as well as sums totaling about $484,000 to the Miami Heat, were also made public.
These sums consist of payments made by an FTX subsidiary to Monumental and the Heat for $969,000 and $400,333, respectively, just before the cryptocurrency company filed for Chapter 11.