Formula 1’s Top Team Hit By FTX Crypto Collapse

The fall of FTX has been a car crash.

Lewis Hamilton Mercedes FTX

Mercedes Formula One team will still be keeping the stickers of one of their main sponsors ‘FTX’ for the upcoming Brazilian Grand Prix, despite the cryptocurrency company nearly collapsing.

FTX, the world’s largest crypto exchange (although it remains unclear for how much longer that will remain the case), crashed this week after a huge surge of withdrawals from users. An estimated £5.1 billion (AU $9 billion) is believed to have been withdrawn in a period of only three days.

That said, currently FTX logos are displayed on the nose, cockpit and rear wing of Mercedes’ F1 car, after Mercedes signed a “long-term relationship” with the crypto exchange back in September.

According to Reuters, a Mercedes team spokesmen revealed that Mercedes were evaluating the situation and for the time being, FTX would still be displayed on the cars of Sir Lewis Hamilton and team-mate George Russell.

However, early images captured on Thursday show that the FTX logo appears to be missing from the nose of one of the Mercedes cars in Brazil.

More images from the practice sessions at the Interlagos Circuit today will give us a better indication.

How Did FTX Crash?

Mercedes signed a long term deal with FTX back in September. Image: @FTX

The collapse of FTX came after news came to light that Founder and CEO Sam Bankman-Fried was holding billions of FTX’s own cryptocurrency, FTT, in his crypto hedge fund Alameda Research.

These are meant to be separate businesses, as a fall in FTT value could severely affect both companies – which, low and behold, played out as expected. The close financial ties between FTX and Alameda Research scared investors.

FTX’s rival exchange, and Alpine sponsor, Binance announced on 6 November that they would be selling its FTT tokens, estimated to be worth $500 million (AU $758 million), “due to recent revelations.”  

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This was the main cause of the bank-run-style withdrawing from FTX users.

In a shock move, Binance were later expected to bail out the plummeting crypto company, but pulled out of the deal after only 24 hours, with Chief Executive Chanpeng Zhou stating:

“The issues are beyond our control or ability to help.”

Other F1 crypto sponsors in danger?

The collapse of FTX has triggered a cryptocurrency meltdown, pushing Bitcoin to its lowest price since the onset of the pandemic. In numerical terms, Bitcoin traded below $16,000 (AU $24,000), when less than a year ago it was valued at close to $70,000 (AU $106,000).

But this could send reverberations amongst the other crypto sponsors of Formula One; currently eight teams don a crypto-branded livery.

Twitter user Formula Netflix analysed all of the crypto sponsors in Formula 1 and how much they have dropped off the last year.

They point out that if you invested 10€ (AU $15.40) in ‘Velas’ tokens when their partnership with Scuderia Ferrari was announced, you would have 0.50€ (AU $0.80) today.

Other crypto sponsors such as AlphaTauri’s ‘Fantom’ have lost 95% of their value in the last year.

With the recent dramatic drop in the cryptocurrency market, the final race of the Formula One calendar in Abu Dhabi may be the last we see of many of the crypto sponsors which, only a short while ago, took over the sport.

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