Back in August 2021, Riot Games—the developers of League of Legends—signed a sponsorship deal worth tens of millions of dollars with cryptocurrency exchange FTX. You know, the exchange that is now bankrupt, with its founder arrested and facing serious fraud and money laundering charges.
As Web3 Is Going Just Great’s Molly White reports, the deal was supposed to run for seven years, and involve FTX making “substantial payments” to Riot, starting with $12.5 million for the 2022 calendar year (and escalating to $12.875 for 2023, and so on). So far only $6.25 million of that 2022 sum has been paid, and there is almost zero chance Riot will ever see another cent, so the company has filed a case with a Bankruptcy Court in Delaware seeking to have the rest of the sponsorship deal nullified.
In strictly business terms, that’s perfectly understandable. As Riot point out in their filing, FTX have declared bankruptcy, which should send the whole deal straight into the bin, no questions asked. Just in case anyone does ask questions, though, Riot have added “there is simply no way for FTX to cure the reputational harm already caused to Riot as a result of the highly public disrepute wrought by the debacle preceding FTX’s bankruptcy filing. FTX cannot turn back the clock and undo the damage inflicted on Riot in the wake of its collapse.”
Basically, Riot argue that FTX’s reputation has been so thoroughly trashed in the past few weeks that being even remotely associated with the failed exchange is causing Riot harm. To put a bow on the whole thing, Riot then throw in the fact FTX’s disgraced former boss Sam Bankman-Fried became notorious for playing Riot’s League of Legends during business meetings:
Prior to, and throughout this media firestorm, Riot’s image and reputation to its customer base, remained inextricably linked to FTX through its former CEO, Mr. Bankman-Fried. Media outlets and Twitter commentators splashed images of Mr. Bankman-Fried playing League of Legends—Riot Games’ game— at the same time that FTX was crashing. Mr. BankmanFried is famous for his affinity for the game. He is well-known among investors to play League of Legends during meetings. He acknowledged on Twitter that he played “a lot more [League of Legends] than you’d expect from someone who routinely trades off sleep vs work.” Even Mr. Bankman-Fried’s ranking in League of Legends has been the subject of online commentary with public figures Alexandria Ocasio-Cortez and Elon Musk weighing in.
Even back when this deal was first signed, in August 2021, it was agonisingly clear what the endgame for this whole scam was going to be, whether it was video game developers or NBA teams or overly-eager celebrities.
You would think Riot would know this, especially now in the middle of all this, but another part of the filing argues that the FTX deal needs to be terminated because it is preventing them from further “commercializing the crypto-exchange sponsorship category…currently owned by FTX”. Fool me once, shame on you, etc etc.