In a filing during the FTX bankruptcy case, Riot Games has asked the court to terminate its League of Legends Championship Series (LCS) sponsorship arrangement with the defunct crypto exchange, alleging irrevocable “reputational harm”. League of Legends is one of Riot Games published games.
“The Court should compel FTX to reject the Agreement. First, the Agreement is non- assignable and thus FTX cannot assume it under the Bankruptcy Code. Second, 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,” the gaming firm said in its filing.
Further to the filing, FTX still owes Riot Games $6.25 million for its time as an LCS sponsor in 2022, but that figure will rise to $12.875 million the following year. These payments will “escalate each year through 2028,” increasing the total value of the arrangement to about $96 million. In addition to supposedly facing damage to its brand, Riot says it wants to stop the arrangement now so it may replace FTX with yet another crypto sponsor for the 2023 season.
“The reputational harm inflicted upon Riot cannot be undone,” the filing read. “FTX cannot go back in time and put in place corporate controls for the safekeeping of customer funds that have in the public eye now been absconded.”
The filing cited the bankrupt exchange’s founder, Sam Bankman-Fried, and “his affinity for the game.” Riot Games made FTX an official sponsor and created a new asset that included FTX’s fixed logo on the screen throughout the entire game. That was until FTX imploded.
“Concerned about the negative publicity surrounding FTX’s management of consumer funds and its effect on Riot, Riot attempted, on numerous occasions, to confer with FTX. These attempts have been futile,” the firm said.
Among other reasons, Riot Games is asking the court to compel FTX to reject the agreement because the exchange can no longer honor its monetary and non-monetary obligations.
“FTX defaulted in the first full calendar year of the Agreement. Not only is there no evidence of profitability, but to the contrary, FTX is desperately seeking to recover billions of dollars that have apparently disappeared,” the firm said in its filing. “Given the number of creditors and FTX’s current financial condition, it is not realistic to assume that FTX will ever be able to provide assurances of future performance.”
Bankman-Fried is currently under the Bahamian custody following his arrest. Recent reports have relayed that the former FTX chief has agreed to be extradited to the US.
Information for this briefing was found via The Verge and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
