What you should know about the FTX crash, the Sixers’ ties to the crypto industry

All eyes are currently on crypto as the industry moves away from the crisis Fallout from FTX, one of his most notable exchangeswho saw about $9.4 billion worth of crypto trades every day.

Here’s what you should know about cryptocurrencies, the collapse of FTX, and the connections between the Sixers and the broader crypto industry.

Cryptocurrencies are digital currencies built on or based on blockchain technology. This means that every transaction made with a cryptocurrency – such as Bitcoin or Ether, among others – is recorded in an online ledger.

Various cryptocurrencies reside in the blockchain on which they are built. The price of a given “token” can be influenced by a variety of factors – although the value is generally based on the perceived value attributed to it by those willing to invest.

Perhaps the most well-known cryptocurrency is bitcoin, the price of which can be influenced by supply and demand, investor sentiment, and other factors. That can work extreme volatility. For example, one bitcoin ($BTC) was worth about $17,000 at the time of writing. But a year ago, a $BTC was valued at around $64,000. Investors can buy fractions of bitcoin called “satoshis”. a reference to the token’s elusive creator, Satoshi Nakamoto.

Unlike securities such as stocks, bonds, and other investments whose value is tied to traditional fiat money, cryptocurrencies are not regulated by the United States Securities and Exchange Commission, although this could change. Gary Gensler, the SEC chairman, said last month he would Work with Congress to ensure the crypto industry receives more regulatory oversight.

Cryptocurrencies are bought and traded on exchanges – like Binance, Coinbase and Krypto.com – and stored in digital wallets.

One of those exchanges, FTX, filed for bankruptcy protection last week after a period of turmoil. FTX sought funding after receiving an influx of withdrawal requests it was unable to meet. For a short time, it seemed like peer exchange Binance would take over the company in a rescue bid. but that was withdrawn after Binance CEO Changpeng Zhao reviewed FTX’s financeswhich revealed an $8 billion shortfall.

At that time, Bahamas-based Delaware-based FTX filed for Chapter 11 bankruptcy, and founder Sam Bankman-Fried resigned as CEO.

While monitoring the stock market, Bankman-Fried – often referred to by his initials SBF and once heralded as a crypto hero – built up a fortune reached $26 billion last year and was still around $16 billion before FTX filed for bankruptcyreported Bloomberg.

His fortune was wiped out after FTX collapse.

The money generated by an exchange’s users, primarily through fees, is used in a variety of ways, sometimes for sponsorships and other branding investments. Some exchanges may also have their own tokens so backers can invest in the platform they believe in. Binance, the largest crypto exchange by volume, has Binance Coin (BNB), Krypto.com has Cronos Token (CRO) and before the collapse of FTX, The exchange’s FTT token had jumped on news of a Visa partnership.

Last September, the The Philadelphia 76ers signed a six-year deal with Crypto.comworth approx $100 million annually. Made the partnership Krypto.com the team’s jersey patch sponsor and also included an exclusive set of NFTs.

At the time, Chris Heck, the team’s former president of business operations, told The Inquirer, “These digital currencies really don’t know borders.”

2021, Crypto.com had an estimated $400 million in sports deals. This number does not include those reported $700 million, 20-year deal Crypto.com signed for the naming rights to the arena formerly known as the Staples CenterHome of the Los Angeles Lakers and Clippers.

In the days since FTX filed for bankruptcy protection, Krypto.com said CEO Kris Marszalek His company will not suffer the same fateaccording to Coindesk.

Krypto.com and FTX previously had about $1 billion in deals, but the company eventually had it reduced its exposure to FTX to around $10 millionMarszalek said during a live interview streamed on Krypto.comYouTube channel of .

Aside from revenue streams like ticket sales, professional sports leagues make a lot of money through advertising partners.

Partnership fees reached nearly $2 billion for the 2021-22 NFL seasonfor example — more than any other league — driven primarily by sports betting and technology companies, CNBC reported, citing an analysis by sports consultancy IEG.

Crypto brands have spent about $130 million for NBA sponsorships in 2021-22reported CNN, citing a separate IEG analysis.

Nielsen estimated Sports shops using crypto, blockchain or NFTs are up more than 1,000% in 2021 compared to 2019. Car sponsorships, until comparison, were only up 81% over the same period.

In addition to Krypto.com‘s Los Angeles arena naming rights deal, FTX last year bought the rights to the Miami arena, which is home to the Heat. FTX paid $135 million for a 19-year deal now in question.

Nielsen estimates Sports fans are about 22% more interested in investing in cryptocurrencies than the average American. The company notes that exposure can be valuable through increased advertising and sponsorships as brands — including crypto exchanges — look to expand their customer base. Nielsen found in a March report that the sponsorships increased the intention of the exposed fan base to buy by an average of 10%.”

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