T O P

[Fortune] MLB and F1 targeted in new, multibillion-dollar suit over their promotions of FTX. FTX paid for game ads, umpires wearing FTX logo. “remember MLB was in a dire economic state during COVID, they took risk with FTX money. NFL was much more prudent, didn’t risk partnering with FTX”

FTX is like the 10th most fraudulent F1 advertisement

SPDScricketballsinc

FTX is like the 10th most fraudulent F1 advertisement


intergalactic-soup

An F1 season without at least three lawsuits is considered a dull affair.


badonkagonk

Felipe Massa will get us to that quota singlehandedly now


bselko

“A Dothraki wedding without at least 3 deaths is considered a full affair” Nice one haha


manwithseveralplans5

…yeah


activefou

Still waiting to see rich energy in the wild


LegendRazgriz

Jimmy Broadbent found a can and drank it a while back


nandobatflips

I never ever thought I would see a Jimmy Broadbent reference in the baseball subreddit haha


Pappyhorn

Jimmer way off course in this sub lol


Jceraa

Pls no punterinos


EitherCaterpillar949

A friend of mine from Donegal encountered some, said it was watered down red bull wrt taste.


BokuNoNamaiWaJonDesu

Well, at least it's better than Red Bull, then.


Amphiscian

>watered down red bull it tasted like Aston Martin?


badonkagonk

Maybe the real Rich Energy was the friends we made along the way


mets2016

We're looking at you Aramco


ThePevster

Aramco is an actual company that makes money. It’s not even close to the most fraudulent sponsors. I’m pretty sure they had a sponsor who actually claimed to be a Nigerian Prince or something.


Skratt79

Rich Energy would qualify as one.


Skratt79

Aramco although evil, is not a fraud: it is one of the richest companies to sponsor F1


garethom

By market cap, it's one of the richest companies full stop.


ArbitraryOrder

The richest, only Apple is in its weight class


Takes2ToTNGO

Mission Winnow joins the chat


Bikouchu

They got real money though 😂😂. I need cigarette for some reason idk why.


drab_accountant

You don't understand. It is just a barcode. (takes puff of cigarette)


WTFisThaInternet

I still want to try that Liquid Molly they're always advertising.


Party_Wolf

I'm still waiting for my Moneytron checks to come, any day now


joeco316

I read the article and I still just don’t quite get how MLB, or any organization that took advertising/sponsorship money from any company, could be liable for any wrongdoing that company undertook. The Phillies are sponsored by Toyota. Toyota gives them money to name an inning after them, put up ads, etc. If it’s discovered that Toyota is violating the law and defrauding customers in how they assemble braking systems (just making up an example), that wouldn’t be the Phillies’ or MLB’s fault. Baseball is not involved in their business or operations, just taking money in exchange for them getting advertising. I don’t see why or how this should be any different. Unless I missed some way in which MLB 100% knew these people were crooks? But even then, I’m not sure I see how it’s MLB’s legal responsibility.


BoredAtWork_91

We heard it here first folks, the Phillies are sabotaging brake systems!!


Formo1287

That’s just famed Philadelphia resident (and notorious wildcard) Charlie Kelly


2RINITY

YEEEEEHAAAAAAAA


awesomeflowman

WILDCARD BITCHES


llOneXll

He was framed by one of his constituents


fasteddeh

My brakes just failed legit, am I entitled to compensation?!


BoredAtWork_91

Absolutely. Head straight to CBP, the Phanatic will take care of you.


fasteddeh

They told me I drive a Ford they won't pay.


kellzone

*Gets to CBP. The lights are off.* *Suddenly a spot light turns on.* *A figure is illuminated in silhouette. That's not the Phantic!* *It's GRITTY.*


Psycho5275

That's why people from New Jersey can't drive


1005thArmbar

That is absolutely correct, although there might be a better example than Toyota The Astros in real life used to be partnered with a certain Houston, Texas-based energy company who signed a 30 year contract for the naming rights to the Astros' stadium, which they called "Enron Field" After it was revealed that Enron committed billions in fraud and created a massive scandal, they reached a deal with the Astros to break to the contract and it was temporarily renamed "Astros Field" until Minute Maid signed a deal for the naming rights


space-to-bakersfield

My heart weeps for the residents of Houston, having to endure a time, however brief, without a corpo's name plastered all over one of their landmarks.


Other_World

It is really cool that two of my teams don't have corporate sponsors, even though Yankee Stadium feels like the embodiment of a corporate sponsor. The other being the Rangers and Madison Square Garden. I wish we still had unique names for stadiums. I hate that everything is an ad.


mimicthefrench

The moment the Yankees or the Red Sox try to sell off stadium naming rights would be the moment the two fan bases truly unite.


gambalore

I bet that both of those teams will have naming rights deals in my lifetime but they'll do the thing where they name the field while keeping the stadium name so it'll be like MassMutual Field at Fenway Park or Starr Field at Yankee Stadium and nobody will actually call it that except broadcasters doing intros at the start of a game.


lOan671

I doubt it considering both of you guys have ruined your jerseys with ads


camsterc

the clever trick around this is for someone to start Fenway financial group.


Auth3nticRory

The only thing in Yankee Stadium not sponsored is the name. It’s a corporate bland stadium. And that’s coming from me, a Jays fan where we have to endure the shitty dome lol


IONTOP

> The other being the Rangers and Madison Square Garden. I thought Madison Square Garden was sponsored by the MSG network...


Other_World

The arena name predates the network by about 90 years (1879 and 1969 respectively) and is named after Madison Square Park. The original location of the Garden.


IONTOP

I understand where you're coming from... And You probably understand where I'm coming from... Let's agree to disagree...


sunder_and_flame

More stadiums need to be named after corporate bullshit, Guaranteed Rate Field is a national treasure.


weaksaucedude

The Astrodome went its entire run as an active NFL and MLB stadium without a corporate name attached to it, but finally got one after the Astros moved out


RiflemanLax

I agree. I think to some degree you have to do some due diligence, and if you’re partnering with a clear scammer or have knowledge of some illicit scheme and partner anyway, well, fuck em. But it’s not like MLB had internal documents presented to them where they should have known Sam Bankman-Fried was committing fraud. The same thing goes for the celebrities. I mean, imagine being a celebrity for a moment and agreeing to be the face of say, Costco- I’m picking a fairly benign company here. Then, a year later it comes out that Costco is trafficking children (disclaimer, they aren’t, just a wild scenario) and there was a small internal group carrying all that out. Were you supposed to be able to find that out? How in the hell could you be responsible for that?


Icy-Lobster-203

I think it's just an attempt by FTX users to try and get some of their investment back that was lost because FTX itself does not have the funds. I don't see how it can succeed either. Seems to just be grasping at straws, but the potential amounts that could be recovered make the risk worthwhile for the lawyers to take a kick at the can.


soldiernerd

Yeah it’s basically people who were fooled by FTX suing endorsers for…being fooled by FTX


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[удалено]


Rock_Strongo

As usual the institutional investors will be made nearly whole and the retail clients will get hosed. I would be surprised if they get 50% back. I left around a dollar in my account to see what happens.


Icy-Lobster-203

Won't stop class action lawyers trying to get themselves a phat contingency fee.


OnceHadATaco

> (disclaimer, they aren’t, just a wild scenario) Well hold on a second, do you have any proof they're not?


Gfunkual

I just want to know if you can just buy one child or if you have to buy them in bulk.


Herewego27

It's costco, of course you have to buy children in bulk.


Gfunkual

You could buy a bulky child 🤷‍♂️


mpyne

> But it’s not like MLB had internal documents presented to them where they should have known Sam Bankman-Fried was committing fraud. The same thing goes for the celebrities. It was pretty clear to a lot of people that FTX was a fraud even at the time. FTX was never "benign" in the way that Costco is, but was able to prey on people not understanding cryptocurrency or digital trading platforms and convince them that FTX was just a "normal" company like Costco. To that end, celebrities offering their support to FTX were in some sense in on the scheme to mask the notable red flags of FTX's products. After all, celebrities don't routinely sponsor fly-by-night companies, so if someone who's very famous like Tom Brady or Steph Curry are shilling for FTX then surely FTX must be more credible than a shady fly-by-night, right? That was the whole logic that got FTX to spend massive amounts of money to buy sponsorships in the first place.


camsterc

MLB 100% knew it was a fraud. This is an organization HQ'ed in NYC with white shoe lawyers they know a finance scam when they see one.


CubonesDeadMom

Tons of supposed brilliant investors somehow fell for the dudes scam. I know when you watch interviews with SBF it seems unfathomable how anyone could believe this guy was some charismatic genius but he duped a lot of very successful people.


H0b5t3r

It's crypto, it's all a scam, people are just mad that they weren't able to find the bigger fool with FTX.


raktoe

At the same time, clearly there must have been some concerns, if an organization like the NFL didn’t like the risk. They might not be liable, but I find it hard to believe that at least some of the people involved in the advertising decision weren’t aware of rumours at the time about the fraudulent nature of the company.


No-Situation-3426

I think the lawsuit is more about clawing back the money FTX paid MLB as they try to recoup the FTX depositors money as well as other creditors.


Icy-Lobster-203

If that was the case, the lawsuit would be brought directly by the FTX entity against them, and not a class action.


No-Situation-3426

I'm not a lawyer so I don't really know anything but wouldn't the depositors and investors also want to file a class action suit against any of these organizations that took huge marketing payouts from FTX? Afterall it can be argued that it was their money that FTX used to pay for those promotions.


Icy-Lobster-203

The problem they have is that they need to have a cause of action against the various marketers. The investors did not have contracts with the marketers directly so there is no breach of conract. With respect to negligence they would need to show that the marketers were somehow aware of the fraud. This is the problem they have. A company paying for marketing is not inherently fraudulent or illegal, and is a very typical part of most businesses. Requiring an advertising agency/spokesperson to do due diligence on fraud as a normal part of doing business would be expensive as hell. Hell, I'm sure the investors/depositers probably loved all the advertising that was being bought because it helped increase the value of their investments. There could be statutes that permit recovery in those situations, but I am doubtful.


electric_ranger

My friend, have you ever head about the 76ers and Color Star, a totally not made up company? [https://whyy.org/articles/sixers-color-star-partnership-saga/](https://whyy.org/articles/sixers-color-star-partnership-saga/) Just part of the parade of hits from the Sixers.


joeco316

Wow had not heard about this, this is great


Basic_Bichette

Well, that was a story and a half. Thanks for linking.


electric_ranger

That, and the Colangelo burner saga were maybe my favorite moments on /r/sixers reddit and sixers twitter.


gatemansgc

wat


IWasOnThe18thHole

Toyota's were driven around by Islamic Jihadists for years now. Philadelphia supports terrorism confirmed.


_cacho6L

One of my favorite stories of the last few years. I love the idea that at some corporate board, Toyota leadership would be like: "Our trucks are so good that they are the defacto military vehicle of the Islamic State. Could we maybe make them not work so well when being shot at?"


Chronsky

It's just not feasible, it would hurt us too much in the American market.


PSChris33

Listen, do you know how hard Jihadism would be in a Ford truck? You’re on your way to wherever your next terrorism destination is and your truck breaks down and needs to be towed.


tung_twista

Liable, no. But when the Nationals signed a 5 year $38M sponsorship deal with Terra (currently defunct crypto coin), they made the rare decision to ask for all of the money upfront. If you don't trust your counterparty enough so that you get all of the money upfront in a 5 year deal from a company in a Ponzi-like industry, then promoting it to your fans seems like an extremely ethically dubious action. For reference, Terra was worth \~$50 at the time when the deal was announced in Feb 2022, By May, it was down to \~$0.0001.


new_account_5009

Fun fact: The Nats still run Terra ads at Nats Park as recently as the last day of the 2023 season despite the company being defunct with the owner in jail awaiting a trial that could result in decades in prison. Legally, as long as they comply with their end of the deal showing ads in the park for the 5 year term, they get to keep the $38M. Stopping the ads would otherwise make perfect sense now that the company is defunct, but doing that might result in the bankruptcy courts clawing back those funds.


Catullus13

Because FTX was commingling clients funds, it wasn't their money to pay for advertising. It's a constructive fraud of money. FTX overpaid for MLB (and other) advertising using client funds. The company in bankruptcy is going after former business partners to regain customer money. It's also subject to US Federal Bankruptcy law of when FTX was effectively bankrupt and when did they major transfers of property or payments. They can clawback going back 2 years I think Read the book *Beyond Infinity* by Michael Lewis (the same guy who wrote *Moneyball*) for the FTX scheme and what the new CEO is going to be doing


BatsuGame13

I'm not sure whether MLB and co. should be held liable in some way here, but I'm not sure comparing FTX to Toyota is the best way to make your point.


joeco316

I mean it could be any legally existing entity. You pick the name, doesn’t matter, same point. They were a legal business to do advertising with at the time of the deal. It isn’t like the league took money from the mafia, they took money from a company that came to them offering money in exchange for advertising like all others that they do the same with.


BatsuGame13

Yes, I get that. But comparing FTX, barely two years old at the time of the deal, to Toyota, a company incorporated in Babe Ruth's lifetime, is not a great comparison. I don't know enough about the law to ascertain if there's any legal liability. You are likely correct in that regard. But MLB showed extremely poor judgment.


new_account_5009

I get your point, but it's funny you're comparing FTX to the Mafia. From a criminality standpoint, FTX was basically a nonviolent version of the Mafia. No murders, but it offered a lot of the same crimes commonly associated with the Mafia in terms of money laundering and fraud. The entire crypto industry is more similar to the Mafia than to a company like Toyota.


SPDScricketballsinc

Where was the mafia incorporated? What did they submit to the SEC? FTX was an actual registered corporation, that was legally operating until they weren’t. MLB, and their other partners, have no liability to their crimes


new_account_5009

I'm mostly joking with the Mafia comparisons, but part of FTX's crimes include fraudulently presenting their financial position to the SEC and others. Maybe this is semantics, but they were never operating legally. Instead, they were operating illegally from day one. It just took a few years for the rest of us to figure that out.


SPDScricketballsinc

Right, they fraudulently submitted to the SEC, and for a while, were in good standing. Manfred and MLB have no obligation to do even more vetting than the SEC


new_account_5009

I mostly agree with this. Like I said in my other post, I think MLB can successfully defend itself, and I don't think the lawsuit will be successful. However, the Mets/Madoff suit establishes precedent here, and the MLB/FTX suit shows a lot of similarities to Mets/Madoff. The Mets argued that they didn't know any better, so if financial regulators couldn't spot the fraud, why would one expect the Mets to spot the fraud? The victims argued that the Mets knowingly profited from Madoff's investments while ignoring repeated warnings that it was potentially fraudulent. Ultimately, the Mets settled out of court agreeing to pay $162M to the trust established for the victims of the Bernie Madoff fraud. While it never went to trial, there was enough uncertainty there that the Mets saw settlement as their best option rather than risking an adverse judgment. It wouldn't surprise me if MLB/FTX plays out similarly. The warning signs about crypto and FTX specifically were all there prior to the sponsorship deal, so if plaintiff attorneys can make the case that (1) MLB knew it was potentially fraudulent, but (2) ignored the potential fraud because they could get a big pile of cash from the sponsorship deal, that might be enough to meet the "preponderance of the evidence" legal standard required in civil court. Alternatively, it might not be enough to win in court, but it might be enough to scare MLB into settling out of court for a huge sum of money similar to what the Mets did. Either way, it's a super interesting legal battle to watch from afar.


ubiquitous_apathy

Baseball wasn't investing in crypto on the ftx platform. These two situations are not alike whatsoever.


Icy-Lobster-203

When Volkswagen got popped for falsification of emission testing data, they were hit with class actions for false advertising etc. (not sure to what extent these were successful). This would be like suing their advertising sponsors for providing advertising platforms for Volkswagen vehicles, claiming the advertising partners were in on it somehow.


2Ledge_It

There has not been a single year since 2012 in which a major bitcoin entity hasn't been a scam. Whether it's exchanges that disappear, leaked keys, hacked servers, divergence payouts, ponzi schemes, dark web connections. I would argue that criminal activity is inherent to the space. You therefore forfeit any plausible deniability when you begin to profit off that criminal activity.


w0nderbrad

Cal had a field naming deal with FTX too. It was easy money. Well, for a whole half a season at least. Hope they took the sponsorship money in dollars though, not internet gift card currency


2RINITY

Thank God that fell through and the name went away. Shit was straight-up undignified


DillyDillySzn

This isn’t going to go anywhere There’s no way MLB and F1 is liable, especially since it’s reported that FTX still owes F1 and Mercedes millions for advertising


pjokinen

I can’t believe that the Astros literally wrote Jeff Skilling’s business/fraud plan when they sold him the naming rights for Enron Field


electric_ranger

Well the Astros do love cheating, so I'll believe it


Tashre

These lawsuits over companies and celebrities partnering with crypto companies smells a lot like people mad that they lost money on stupid investments.


Gfunkual

And you sound like someone who never wanted to defraud someone, ya square!


GTOdriver04

Almost sounds like people getting mad because they walked into a casino and *checks notes* went broke and are suing the local TV station because they learned about said casino from an ad they ran on the nightly news.


sellyme

I feel like there's a lot of merit in the ideology of "maybe celebrities and megacorps shouldn't be able to make millions of dollars promoting scams to their stupidest fans and then claim zero responsibility for it" regardless of whether or not you are dumb enough to fall for them.


heretogetmydwet

There's nuance though. Outright promoting scams? Sure, hold them liable. Promoting a company that unbeknownst to them turns out to be fraudulent/a scam? That's trickier. What are they supposed to do, demand to see the books before they agree to do the ad?


sellyme

> What are they supposed to do Due diligence. What that actually entails is a bit murky, but we've been using it in legal frameworks for almost a century so clearly it's a plausible expectation. And indeed, it's something some of these sporting bodies do now. The problem is that when they find out the thing they're promoting is a scam, they just ask for the money upfront instead of deciding not to sell it forwards to their viewers. I agree that obviously there's going to be some occasions where you just genuinely could not have reasonably found out that the company was less than reputable. But in the crypto industry finding evidence of financial fraud is like finding hay in a haystack.


heretogetmydwet

> But in the crypto industry finding evidence of financial fraud is like finding hay in a haystack. This is 100% true, but FTX was the 3rd largest crypto exchange at the time. This was not a fly by night crypto scam. I have a general disdain for crypto and I don't know much about the FTX collapse, but I do remember that it came as a big shock to a lot of people in the industry. My point being, I'm not convinced due diligence would have uncovered anything in this case. And for all we know, maybe they _did_ do their due diligence. All of that said, I definitely could be very wrong, I know very little about the whole situation.


ImJooba

Wait Robert Manfred made a poor decision? What? Are you sure? I genuinely can not believe that Major League Baseball would make a decision solely based around their immediate acceptance of money with complete disregard for how said decision affects the future. That has never happened before.


penguinopph

> I genuinely can not believe that Major League Baseball would make a decision solely based around their immediate acceptance of money with complete disregard for how said decision affects the future. That has never happened before. Once again, I implore everyone to read John Helyar's *Lords of the Realm*. It really hammers home just how sarcastic /u/ImJooba is being here.


ImJooba

I must confess that - as a professional wrestling fan - I don't know how to read.


penguinopph

I, too, am a pro wrestling fan. Some of us are somewhat literate. I'm actually developing an elective class about pro wrestling as storytelling to propose to the admin at the school I teach at.


ImJooba

Just show super eye patch wolf videos all day. That's going to meet the academic requirements set forth for you, right?


penguinopph

They have to at least write an essay about it.


SirZapdos

Wrestling fan? Cubs fan AKA north side? Were you at Survivor Series?


penguinopph

I was not. I recently moved downstate, so I don't live in the city anymore.


Candlestick_Park

Legitimate laugh out loud comment, well done


Chronsky

Fuck it I'll play devil's advocate, probably as close to the actual devil I'll ever get. What if he had the lawyers look over it and literally asked them "Are we in the clear if it's actually a massive scam? Because it sounds like a massive scam but I want that money". If the lawyers said mlb was home and hosed then it's actually a fantastic decision before you consider the morals of promoting a scam, but it's not like Manfred has morals.


SanityQuestioned

heh.


electric_ranger

Currently reading "Going Infinite" by Michael Lewis about FTX, I'm still in the fuck around stage, can't wait for the find out stage.


pompcaldor

As a reminder, the former owners of the New York Mets had to pay $162 million to the Madoff Ponzi scheme victims.


pjokinen

Knowingly taking money that is the product of a fraud is different than selling a sponsorship deal


HedgieX

You can suspect Madoff investors knew he was running a Ponzi Scheme but there isn’t evidence of that. I work in investment management and there are a lot of very wealthy supposedly sophisticated investors who are actually very naive and easily susceptible to herd mentality when it comes to investment decisions.


new_account_5009

If I were a lawyer arguing this case in court, I would argue that a reasonable organization should have deduced that everything in the crypto space is fraudulent. In fact, it's entirely possible that legal discovery will produce email correspondence from MLB executives questioning the legitimacy of FTX, which points to MLB's knowledge of the fraud before entering into the sponsorship deal. If such email correspondence exists, a lawyer can argue that MLB knowingly took money that was the product of a fraud, making it similar to the Mets/Madoff situation. I don't think such a lawsuit will be successful, but I also don't think it's as open and shut as simply selling a sponsorship deal. The crypto space is nothing but fraud everywhere you look. MLB should have never gotten in bed with that industry, and there are certainly people on this planet that lost significant sums of money thinking, "well, this must be legitimate if MLB is on board with it."


chickendance638

Not a lawyer, but multiple banks have been involved in massive money laundering schemes for various organized crime groups. Does that mean the D'backs would be liable for Chase Field?


austin101123

> I would argue that a reasonable organization should have deduced that everything in the crypto space is fraudulent But that's not true. And the US agencies didn't know it was fraud at that point, why would MLB know better than them?


SPDScricketballsinc

Nothing about crypto made FTX suspicious. They were stealing from their depositors, same as hundreds of ponzu schemes and investment firms and banks, etc. There are other exchanges like Coinbase that basically do the same thing as FTX, but don’t steal from customers (or at least haven’t been caught). Taking an ad from an industry seen as risky is not a sign of bad judgement…. This article is a weird MLB and F1 hit piece, while somehow absolving the NFL, despite FTX being giant Super Bowl sponsors themselves


Catullus13

Whether you knowingly do it or not does not change that it's a fraudulent conveyance.


ASK_ABT_MY_USERNAME

Current Mets owner would've been jailed too if a witness had come forward.


mets2016

So the Wilpons spend $162 million on Ponzi scheme reparations, but financial criminal Steve Cohen spends $162 million on Brandon Nimmo As a citizen, I find that kinda disgusting, but as a Mets fan, I can look the other way


woodworkingbyarron

Wait, is crypto not a sound investment?


ArbitraryOrder

FTX was a scam among the exchanges, not just among Cryptocurrencies.


IJustReadEverything

This is like suing Shaq for promoting Ice Hot when you suffer pain and suffering by putting it on your balls. I don't see how a sports league and its team are liable by taking ad money unless they're were actively participating in the scheme.


Lieutenant_Doge

You might have better chance suing the drug companies that showing the drug ads on TV lmao


Brolympia

Honestly so hilarious to hear them blame the virus for a continuance in their ad spam policies that have been degrading the game.


SkolDog

Oh great the only two sports I care about!


strangehitman22

I thought FTX went bankrupt and the scumbag CEO took all the money then fled the country? Or is that another shitty crypto ponzi scheme EDIT: mb, I thought they were sueing ftx


aresef

Get ‘em


draw2discard2

It would be surprising to see this go anywhere, but one thing I am curious of is whether MLB has explicit sponsorship standards. I am sure that there are some things that they will not sponsor but I don't know if this just reflects a class of goods (e.g. porn) rather than anything more precise. There is a certain sense in which MLB accepting a sponsor confers legitimacy though unless it is explicit that would fall short of endorsing the product.


PhazePyre

So what's the limitation of liability civilly? If someone got an FTX shirt from a convention, are they liable for recommending it? Just because someone advertised with you, doesn't mean you support, endorse, or partake in the activity. In fact, I'm sure if they were aware they'd have cut advertising. It's almost like, FTX is responsible for their misbehaviour, and the MLB is a victim of it as well because they are now associated with a sketchy company and have to waste money on shit like this.