In light of recent events with the crypto company FTX, Riot Games has decided that it is time to cut ties with the company completely. The League of Legends developers have filed a motion to dissolve their sponsorship contract with FTX, stating it has caused them "irreparable reputational harm".
For those who might not know what is happening with the crypto-currency exchange company FTX, here is a bit of a rundown on what happened. The owner of the crypto empire, Sam Bankman-Fried, has been accused of not only mishandling the money of those who invested and traded with the company but has left the company in complete financial ruin. Almost overnight, the empire he had built came crumbling down around him, and he went from owning a $32 billion company to filing for bankruptcy as investigations into the company began. He has since been arrested as well.
Since these happenings, Riot Games has determined that their best course of action is to also jump ship and cut ties with FTX. FTX was legally obligated to fund Riot Games as their sponsor for their eSports Tournaments, but Riot believes at this point it is a lost cause. The deal between Riot and FTX is estimated to be worth around $96 million USD, meaning that the downfall of FTX not only affected Riot Games reputationally but financially as well. This is not only due to the relationship between FTX and Riot but because of the personal relationship between Sam Bankman-Fried and the game League of Legends itself.
Realistically, the choice to now take legal action to dissolve this contract is understandable. Who in their right mind would want to be tied to a company that has these allegations made against them, or the owner of the said company who is standing trial for these allegations? The collapse of the crypto-company, as well as the conspiracy and fraud charges against Sam Bankman-Fried, has caused Riot Games "significant" monetary damages due to this deal with FTX being the company's largest sponsorship agreement for any of its eSports leagues to date.
FTX reportedly owes Riot Games over $6 million USD for 2022, and per the court motion that is being filed, they are owed additional money over the next six years. One of the main issues Riot seems to be facing with this current contract with FTX still in place is the ability to gain another crypto sponsorship. Assuming that Riot now wants to find another crypto company to sponsor them, and it sounds like they do, this contract with FTX is currently preventing that from happening. In the motion to Compel, it states,
"Even if the Agreement is terminated promptly, there will not be enough time to replace FTX as a partner for the 2023 competitive season. Thus, Riot will only be able to mitigate the financial loss. The longer Riot is prevented from commercializing the crypto-exchange sponsorship category and the broadcast assets currently owned by FTX, the more damages Riot incurs."
Hopefully, as the legal process and hearings continue for Sam Bankman-Fried, Riot will be able to make their way out of this deal and prepare for the 2023 competitive season.
