Massive Cryptocurrency Company On The Brink Of Total Collapse
After losing nearly all its value in one day and failing to secure a bailout from its competitor Binance, the cryptocurrency firm FTX is on the verge of falling to complete ruin.
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For the past 10 years, Cryptocurrency slowly started making waves in financial markets around the world and investors have been wary about exactly when the shoe will drop as the markets have always been volatile. The sheer fact that Crypto carries a monetary value while deriving that value off of a 256-bit hash expressed in a hexadecimal format is a bit nerve-racking on its own. Now one of the largest Crypto exchanges is staring over the edge of the proverbial cliff, Cryptocurrency FTX is completely out of potential angel investors and sly corporate business maneuvers to save its rear end.
It appeared last week that FTX had pulled off a minor miracle when they announced they would be acquired by crypto titan Binance. FTX stated that it was currently in a slight liquidity situation and that Binance would come in and infuse the needed capital to keep the train on the tracks. However, Binance called off the deal on Wednesday after they conducted a thorough financial review of FTX’s bookkeeping.
Reminiscent of the Dot.com boom and bust period of the 1990s, it was predictable that many startup companies would jump into the pool of unimaginable riches during the boom phase. Then after a period of market stability when consumers get comfortable utilizing these services, we would enter the bust phase at that point only the strongest and better-run companies inevitably will survive. Whether or not Cryptocurrency FTX is the first domino of many to fall remains to be seen but it is an ominous sign, to say the least.
However, FTX’s decisions over the past couple of years on how to utilize their liquid capital sheds light on why they are in the position they are in. According to CNN Business, “FTX has invested heavily in sports sponsorships, including partnerships and naming rights in professional basketball, baseball and Formula One racing.”
CNN Business also said that “In 2021, FTX inked a reported $135 million, 19-year deal with the NBA’s Miami Heat to rename the American Airlines Arena as FTX Arena. Major League Baseball struck a five-year deal in 2021 to name FTX as its official cryptocurrency exchange, a partnership that includes putting FTX patches on umpires’ uniforms. FTX is also the official cryptocurrency exchange partner of the Mercedes-AMG Petronas Formula One Team.”
That was a taste of all their indulgence in the sporting world. Cryptocurrency FTX also acquired the naming rights of the University of California’s football stadium and struck a deal with baseball superstar Shohei Ohtani of the Los Angeles Angels to be their global ambassador.
NBA’s Golden State Warrior’s superstar Steph Curry signed a deal for a partnership with his foundation Eat, Learn, and Play. Cryptocurrency FTX has invested millions upon millions of their companies’ dollars into these teams, players, and leagues. It just might be what scared Binance away when they looked at FTX’s financial records.
In fact, many Crypto companies made the same decisions investing in the wide world of sports to give their companies much-needed brand value. By attempting to establish themselves in the minds of consumers and investors alike so they comprehend the fact that there are more options in the Crypto market than Bitcoin and Coinbase. These overextensions of Cryptocurrency FTX’s capital may have been the last nail in their coffin. Now that one major Crypto exchange has fallen, it begs the question, Who is next?
