• Binance signs non-binding agreement to acquire rival FTX
  • FTX has deals with teams, athletes and governing bodies

Cryptocurrency exchange Binance has rescued rival FTX from the brink of collapse in a development that could have ramifications for the sports industry and its growing relationship with blockchain-based technologies.

Binance has signed a non-binding agreement to acquire FTX’s operations outside the US and cover a “significant liquidity crunch” resulting from concerned investors withdrawing US$6 billion from the exchange in just three days. 

‘This afternoon, FTX asked for our help,’ tweeted Binance chief executive Changpeng Zhao on 8th November. ‘To protect users, we signed a non-binding [letter of intent] intending to fully acquire [FTX] and help cover the liquidity crunch. We will be conducting a full [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 how close it came to collapse.

FTX’s ‘FTT’ token has plunged in value, while other cryptocurrencies have also declined in value, including Bitcoin and Binance’s own ‘Binance coin’ token. 

SportsPro says…

This news affects sport in two ways. The first is that many sports teams and federations have launched official non-fungible token (NFT) collections, such as digital trading cards, video moments, or limited edition artworks.

While these differ from fungible tokens like cryptocurrencies in that each of these tokens are unique and often have an associated utility, many NFTs are acquired for speculative reasons with owners hoping to benefit from any increase in their value. A crash in the wider market will inevitably affect valuations.

But perhaps the more pressing concern relates to sponsorship. FTX has been active in the market, reaching deals with the National Basketball Association’s (NBA) Miami Heat, the Mercedes Formula One team and the International Cricket Council (ICC). Meanwhile, tennis star Naomi Osaka is a global ambassador.

As recently as September, FTX paid US$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 be concerned about sponsorship payments, while others might fear the crypto market is no longer the world of commercial possibility that it might have once been.