- Binance signs non-binding agreement to acquire competitor FTX
- FTX has contracts with teams, athletes and governing bodies
Cryptocurrency exchange Binance has rescued rival FTX from the abyss in a development that could impact the sports industry and its growing relationship with blockchain-based technologies.
Binance has signed a non-binding agreement to take over FTX’s operations outside of the US, covering a “significant liquidity crisis” stemming from worried investors pulling $6 billion from the exchange in just three days.
“This afternoon, FTX asked for our help,” Binance CEO Changpeng Zhao tweeted on March 8th November. “To protect users, we have signed a non-binding declaration [letter of intent] intends to acquire in full [FTX] and help to cover the liquidity crisis. We’re going to do a full one [due diligence] in the coming days.’
Despite the intervention, there are concerns about the health of the cryptocurrency market given the size of FTX’s platform, which allows users to buy and sell digital assets, and its near collapse.
FTX’s “FTT” token has fallen in value, while other cryptocurrencies have also fallen in value, including Bitcoin and Binance’s own “Binance Coin” token.
This news affects the sport in two ways. The first is that many sports teams and federations have released official collections of non-fungible tokens (NFT), such as B. digital trading cards, video moments or limited edition artworks.
While these differ from fungible tokens like cryptocurrencies in that each of these tokens is unique and often has an associated utility, many NFTs are acquired for speculative reasons, with owners hoping to capitalize on an appreciation in value. A crash in the broader market will inevitably affect valuations.
But perhaps the more pressing concern is sponsorship. FTX has been in the market and has signed deals with the National Basketball Association (NBA) Miami Heat, Mercedes Formula One Team and the International Cricket Council (ICC). Tennis star Naomi Osaka is now a global ambassador.
As recently as September, FTX paid $1.4 billion to acquire the assets of bankrupt former rival Voyager Digital, which had deals with the National Women’s Soccer League (NWSL), among others.
Current partners will worry about sponsorship payments, while others may worry that the crypto market is no longer the world of commercial opportunities it once could have been.