Miami-Dade Heat Cuts Ties With FTX After Crypto Exchange Bankruptcy – NBC 6 South Florida
Miami-Dade County and the Miami Heat announced Friday that they will end their business relationship with FTX following the news that the cryptocurrency exchange will file for bankruptcy.
In a joint statement, the county and the NBA team said they intend to find a new naming rights partner for the arena.
“The reports about FTX and its affiliates are extremely disappointing,” the statement read in part.
As the cryptocurrency market plummets, FTX CEO Sam Bankman-Fried also resigned.
Under the FTX naming rights contract with the county, employees can terminate the contract due to the company’s default and begin the search for another sponsor.
To some, it resembles the bank run at the beginning of the Great Depression. People used US dollars to buy cryptocurrency through FTX, using it as a bank. FTX then used the money to make some questionable financial decisions, handing over their own created cryptocurrency.
That spooked another major company that was looking at buying the entire company, Binance.
When Binance decided not to buy FTX due to the financial issues, people ran into the company and withdrew their deposits.
Now the company is $8 billion underwater and announced it will file for bankruptcy — putting the future of FTX Arena’s name in jeopardy.
The company behind the name of FTX Arena announced that it will go bankrupt as the cryptocurrency market plummets. NBC 6’s Phil Prazan reports
“It’s an evolving situation for FTX,” Miami-Dade County Mayor Daniella Levine Cava said before announcing the county was cutting ties with FTX. “Obviously we’re monitoring it closely and exploring all possible avenues to prepare. We’re not concerned in the short term, but of course we have to make sure we have a naming rights company for the arena.”
On page 87 of the contract between FTX-affiliated company and the county, the parties agreed that in the event of default, the county can terminate the agreement, find a new name sponsor and try to obtain compensation through the bankruptcy process.
The last part can be difficult because the bankruptcy process will need to dissolve $8 billion in debt.
All of this happened weeks away from a key deadline for the company to pay $5.5 million under the deal.
Miami-Dade County commissioners approved it just a year and a half ago. It was supposed to be a 19-year deal with the county getting $90 million in total.
Now it looks like the county won’t even get $10 million after the Miami Heat and the contract brokers get their cut.
Levine Cava had big plans for the unexpected, creating a safety program to stop youth gun violence called the “Peace and Prosperity” plan. The program dedicated money to the Park Department’s Fit 2 Lead program and to the Miami-Dade Police Department.
“We are proud of the impact our Peace and Prosperity Plan—sponsored by County Commissioner Keon Hardemon and funded through the original agreement—is already having in preventing violence and creating opportunities for young people across Miami-Dade, and we look forward to identifying a new partner to continue funding these important programs for years to come,” the county and the heath said in a statement Friday night.
Levine Cava wrote in an earlier statement that she remained committed to the program.
“Should FTX be unable to meet their commitment to the county, we will work to identify alternative funding to close the gap in the short term to continue funding our peace and prosperity programming, including Fit2Lead,” she wrote.
The FTX Arena name has an uncertain future after the cryptocurrency exchange filed for bankruptcy. NBC 6’s Ari Odzer reports
Commissioner Rene Garcia was the only county commissioner to vote against the deal, arguing in March 2021 that the county was moving too quickly. He now wonders if the gun violence prevention programs could be in jeopardy without another source of money.
“I think this is a good lesson for all of us that we should rush into these multi-year, multimillion-dollar contracts,” Commissioner Garcia said. “We should be doing a much better job investigating these companies, especially these companies that have only been in this country for a year.”
One winner in all of this was the contract broker, Superlative Group, which has been paid and gets to keep nearly $3.5 million.
Kurt Wuckert Jr. is bitcoin historian for coingeek.com and tells NBC 6 he’s not surprised by this latest failed company.
“This has happened several times,” Wuckert said. “You’ve got insiders controlling the money in ways you don’t understand, they’re taking customer deposits and they’re figuring out ways to make money with it, which is the kind of thing that’s regulated against in the banking economy.”
FTX CEO Sam Bankman-Fried apologized online Friday and stepped down as CEO. It is unclear whether people who used FTX will have access to US dollars or cryptocurrency.
“I think the lesson is that when it’s too good to be true or sounds too good to be true, it probably is,” Wuckert said.
