FTX crash hits Fragadelphia
Cryptocurrency exchange FTX, shortened for "Foreign Transaction", announced on Friday that it was filing for bankruptcy after a tumultuous week for the company. The company had been under pressure for the last week after it was revealed by a CoinDesk report that founder Sam Bankman-Fried had "used $10 billion in customer funds from the exchange to prop up his other crypto business, Alameda Research".
It also came after the CEO of fierce rival Binance posted a series of tweet's questioning the stability of FTX and that he "planned to sell his cache of FTX’s crypto token, caused a liquidity crunch exposing a reported $8 billion hole in the beleaguered company’s balance sheet" according to The Verge.
The incoming demise of FTX is poised to shake up the stability of some esports entities as they have relied on the exchange for several lucrative sponsorship agreements. Most notably, TSM agreed to a 10-year, $210 million agreement that would result in the esports organization changing its legal business name as a way to circumvent the restrictions placed on advertisements in certain franchised leagues like League of Legends and VALORANT.
TSM has not yet publicly commented on the collapse of FTX and how it will affect the organization's outlook, especially concerning their recent announcement to expand into the European CS:GO scene.
While not as exposed thanks to the length of the deal, FURIA, and FTX agreed to a one-year sponsorship in April 2022 worth approximately $3.25M. The current status of the agreement, which hoped to be extended for years to come, is unknown as FURIA have also not yet released a public statement.
Most importantly to North American fans, the agreement between Nerd Street and FTX has been canceled. The sponsorship announced in early February, was critically important to Nerd Street as it supported prize pools, events, and bled into title rights for the Fragadelphia event.
Fragadelphia was largely supported by FTX through it's year-long series in 2022 across the country culminating in the $100,000 Fragadelphia 17: Finals in Philadelphia that featured several European teams.
Additionally, the FTX-sponsored tournament series featured five Cash Cups, eight LAN events spread throughout the country, three loser tournaments at Fragadelphia 17 Finals as well as the Last Chance Qualifier.
With FTX as the major sponsor helping financially support the tournament, there was optimism that given the success of this year's circuit it could potentially expand with help from the cryptocurrency exchange. However, that will not be the case after John Fazio, CEO of Nerd Street told Dust2.us that the relationship has been severed.
Our partnership with FTX will not be continuing. This will affect the prize pot size and talent budget for Nerd Street Champs and all affiliated events in 2023. However, we are still as committed as ever to our goal of building long term sustainable competitive ecosystems for developing talent-in-game and on-screen.
We've built these circuits from day 1 with a focus on sustaining off player entry fees so that sponsors only impact prize and talent spend. It may take a while for us to get back to the prize pot sizes we had this year, but it won't stop us from continuing to give our gamers the competitive opportunities they have come to expect from us.
Fragadelphia will continue to operate, however, the community should likely expect smaller prize pools and potentially lesser LAN opportunities. The full impact of the sponsorship is not fully realized at this time, but should be known as next year's events plans get released in the next few months.