The multiple impacts of the FTX bankruptcy on Miami
The cryptocurrency company FTX was in the middle of moving its U.S. headquarters from Chicago to Miami when it collapsed last month.
But the arena where the Miami Heat plays still bears the name of FTX. That was part of a 19-year, $135 million sponsorship deal for the arena.
Bloomberg News reporter Carly Wanna and WPLG 10 reporter Christina Vazquez joined the South Florida Roundup to discuss where the contract between Miami-Dade County and FTX stands.
“They were a company that was seen as very successful,” Wanna said. “They had a lot of philanthropic ventures, and it turns out that was all basically built on a house of cards.”
FTX filed for bankruptcy in November after the founder, Sam Bankman-Fried, said the company did not have sufficient assets to meet customer demand. Since then, Miami-Dade County has asked a federal bankruptcy court to remove the FTX name from the arena.
The county has received nearly $20 million for the first two years of the agreement. A payment of $5.5 million is due in January.
“[It's] hard to say at this point whether FTX would even be able to fulfill that,” Vazquez said.
“There's a line in the motion that says a failure to make a payment required of the naming rights agreement constitutes a default that triggers the right for Miami-Dade County to terminate the naming rights agreement.”
Money received from the naming rights deal had been pledged to support Miami-Dade County’s anti-violence initiatives.
“This all came out of one particular summer [when] there was just an uptick in incidents involving youth gun violence,” Vazquez said. “This peace and prosperity plan was developed under these funding initiatives to combat poverty [and] mitigate against youth gun violence.”
FTX has been accused of misusing customer funds and redirecting them to personal gains. U.S. authorities are working to claw back money earned from “one of the biggest fraud schemes in U.S. history,” according to Vazquez.
Since the county was not an investor in the company, the $20 million received is not subject to a claw-back — but prosecutors could argue that it is tainted money.
Miami City Mayor Francis Suarez has been working to make Miami a crypto capital. That is why he brought the Miami Bull — a crypto-inspired, 3,000-pound, 11-foot tall, chrome and fiberglass statue — to the Bitcoin 2022 conference and advocated for FTX to bring its headquarters to Miami.
According to Wanna, the mayor has said his plans to turn Miami into a crypto city are going “full steam ahead" regardless.
“So I don't think this really stunts Miami's plans to make itself into an innovation hub,” Wanna said.
On the most recent South Florida Roundup, we also discussed the arrival of many Cubans in Florida and the property insurance bill that was passed in Tallahassee.
To listen to the full episode, click here.