Ethics CasesSport

Cases · MLB, NBA and others · 2021–2025

Moon Blasts and Umpire Patches: The FTX Collapse and Sport's Crypto Sponsors

Between 2021 and 2022 the cryptocurrency exchange FTX became one of sport's biggest sponsors: naming rights to the Miami Heat's arena, patches on Major League Baseball umpires' uniforms, and endorsement deals with athletes including Tom Brady, Stephen Curry, Naomi Osaka and Shohei Ohtani. In November 2022 FTX collapsed into bankruptcy, and its founder Sam Bankman-Fried was later convicted of fraud and sentenced to 25 years. Investors sued the celebrity promoters. In May 2025 a federal judge dismissed most claims, finding no plausible allegation that they knew of the fraud, though he said they may have been 'uninformed, negligent, or even reckless.' Miami-Dade County found a new arena sponsor. The case asks what due diligence teams, leagues and athletes owe fans before lending their trust to a sponsor's product.

By Tanner Simkins, editor

Timeline

  1. Miami-Dade County and the Heat agree a 19-year, $135 million arena naming deal with FTX.
  2. MLB names FTX its official cryptocurrency exchange in a five-year deal, with patches on umpires' uniforms.
  3. The FDIC orders FTX to stop suggesting crypto products are federally insured.
  4. FTX collapses into bankruptcy; investors sue celebrity promoters.
  5. The arena is renamed Kaseya Center under a new 17-year deal.
  6. Sam Bankman-Fried is sentenced to 25 years in prison.
  7. A federal judge dismisses most claims against FTX's celebrity promoters.

The ethical issues

  • Sponsor due diligence when the product is a financial risk.
  • Athlete endorsements and responsibility to fans who follow them.
  • Leagues lending their officials' credibility to a sponsor.
  • Disclosure of payment for endorsements.
  • Who bears the cost when a sponsor collapses.

Stakeholders

StakeholderInterests & obligations
Fans and retail investorsHonest information about the risks of what is promoted.
Leagues and teamsSponsorship revenue and their reputation.
Endorsing athletesIncome and their personal brands.
Miami-Dade County taxpayersReliable naming-rights revenue, which the county links to crime-prevention programs.
RegulatorsConsumer protection in an unregulated market.
Other sponsorsCredibility of sport sponsorship.

The case

Background

In 2021 and 2022 cryptocurrency companies spent heavily on sport, and FTX, founded by Sam Bankman-Fried, was one of the most visible. It bought the naming rights to the Miami Heat’s arena from Miami-Dade County under a 19-year, $135 million deal.[3] In June 2021 Major League Baseball signed a five-year deal naming FTX the “Official Cryptocurrency Exchange brand of MLB,” and FTX patches appeared on umpires’ uniforms. MLB chief revenue officer Noah Garden said the league would “partner with a global leader in the early stages of their unbelievable growth.”[1] The University of California’s football field also carried the FTX name.[1]

FTX also signed athletes as promoters. Shohei Ohtani, already baseball’s global star, signed with FTX in November 2021, five months after MLB did; others included Tom Brady, Stephen Curry and the Golden State Warriors, Naomi Osaka, Shaquille O’Neal, Udonis Haslem and David Ortiz.[1][5]

The rules and governance

Cryptocurrency exchanges were lightly regulated in the United States. In August 2022 the Federal Deposit Insurance Corporation ordered FTX to stop suggesting that crypto investments were regulated or insured by the federal government, warning that such statements were “likely to mislead, and potentially harm consumers.”[1] Sports leagues set their own sponsorship rules. MLB commissioner Rob Manfred later said baseball had been “really religious about staying away from coins themselves, as opposed to more company-based sponsorships.”[1]

Decision point: the collapse

In November 2022 FTX collapsed into bankruptcy. The lawyer appointed to run it, who had overseen the Enron bankruptcy, told the court he had never seen “such a complete failure of corporate controls and such a complete absence of trustworthy financial information.”[1] Bankman-Fried was later convicted of fraud; on 28 March 2024 he was sentenced to 25 years in prison and ordered to forfeit $11 billion.[4]

Sport had to respond. A class action filed in November 2022 named Brady, Curry, Ohtani, Osaka, O’Neal and others, alleging FTX needed them “to continue funneling investors into the FTX Ponzi scheme.”[1] Manfred called the sponsorship “a meaningful deal for us” and said it was “probably a pretty good bet” that the umpire patches would come off. “Obviously, the FTX development was a little jarring,” he said, adding that “individual players take advice from people other than us on those topics.” MLB itself was not named in the lawsuit, and days after the collapse its website still listed FTX among the league’s 38 official sponsors.[1]

Decision point: replacing a sponsor

Miami-Dade County, which owns the arena, had to replace FTX; a bankruptcy court approved ending the FTX deal in January 2023.[3] In April 2023 it announced a 17-year deal with Kaseya, a software company, worth about $117 million, and renamed the venue Kaseya Center.[2][3] The Heat’s business president said “the collapse of our previous partner caught everyone by surprise.”[2] Mayor Daniella Levine Cava said the deal, with a Miami-headquartered company, would let the county “continue investing in critical crime prevention programs.”[2]

Aftermath

The celebrity lawsuits were consolidated in federal court in Florida. On 7 May 2025 Judge K. Michael Moore dismissed most claims against the celebrity and YouTuber promoters. He wrote that the plaintiffs had failed to “plausibly allege Defendants’ knowledge of FTX’s fraud” or causation. The celebrities may have been “uninformed, negligent, or even reckless,” he wrote, but that was not enough for the claims as pleaded.[5][6] Claims under Florida and Oklahoma securities laws survived, and plaintiffs could amend.[5][7] O’Neal had settled with investors on undisclosed terms.[5]

The core dilemma

Leagues, teams and athletes took money to tell fans, in effect, that a crypto exchange was trustworthy. When it collapsed in fraud, courts found most endorsers not legally liable because they did not know. But did they do enough to find out? What due diligence do sport organizations and athletes owe fans before lending their credibility to a financial product?

Competing values

  • Revenue vs. responsibility: large sponsorship fees against fans’ financial welfare [1][3].
  • Legal liability vs. moral responsibility: no proven knowledge of fraud against a duty to ask harder questions [5][6].
  • Brand trust vs. brand risk: a sport’s credibility lent to a sponsor against the damage when it fails [1].
  • Player autonomy vs. league stewardship: athletes’ own endorsement choices against the league’s sponsor choices [1].

Strongest arguments

For the sponsors and endorsers: FTX was valued by sophisticated investors and few saw the fraud; athletes and leagues are not financial regulators [5][6]. The court found no plausible allegation that they knew [5]. Teams and the county found replacement sponsors [2].

For greater responsibility: putting a sponsor on umpires, the sport’s symbols of fairness, lends it authority [1]. The FDIC’s warning came months before the collapse [1]. Fans who trust athletes may follow them into financial products without understanding the risks.

On the remedy: the law asks whether endorsers knew; ethics may also ask whether they should have known, and whether they disclosed what they were paid [5].

Applying the frameworks

Utilitarian

A consequentialist weighs sponsorship income against the losses fans suffered and the reputational harm to sport [1][4]. The judgment depends on what risks were foreseeable, and how many fans invested because of sport’s endorsement.

Kantian

A Kantian lens asks whether fans were treated as ends. Promoting a product to them without understanding it uses their trust as a means to revenue. A rule of “endorse anything that pays, unless you know it’s fraudulent” could not be willed as universal by those who would be on the other end.

Virtue

Virtue ethics asks what prudence and integrity require of an athlete or league. Prudence asks hard questions before taking money from a novel financial company; integrity accepts responsibility when trust has been misused, whether or not the law requires it.

Walk it through: the Simple Decision Model

  1. Spot the issue. You are MLB’s head of partnerships in 2021, considering an exchange sponsor. The stakeholders include fans, players, umpires, clubs, regulators and other sponsors.
  2. Gather facts. Ask about the exchange’s audits, regulation, custody of customer funds and marketing claims. Watch for herd bias: other leagues are signing similar deals.
  3. Test options. Option A: sign as offered. Option B: sign with conditions (disclosures, audit rights, exit terms, no umpire placement). Option C: decline the category until regulation is clearer.
  4. Check codes and law. Consider consumer-protection and securities law, advertising disclosure rules and the league’s own sponsorship policy [1][5].
  5. Decide and document. Record the diligence done, the risks accepted and why the placement fits the sport’s values.
  6. Communicate and follow up. Monitor regulatory warnings such as the FDIC’s, and act on them; be ready to exit quickly and explain why.

What’s settled and what’s contested

Settled: FTX sponsored MLB, the Heat’s arena and many athletes; it collapsed in November 2022; Bankman-Fried was sentenced to 25 years; most claims against celebrity promoters were dismissed in May 2025, with state securities claims surviving; the arena was renamed in 2023 [1][2][4][5].

Contested: how much diligence sport organizations and athletes owed fans, and whether celebrity promoters should bear responsibility for financial products they did not understand.

Why this case matters

Sport’s trust is its most valuable asset, and sponsors buy it. Compare Sports Prediction Markets and Kalshi and Nike’s Vaporfly and Commercial Innovation.

Key terms

Commercialization
The process of turning sport into a product and a business enterprise, with profit pressures that can compete with principle.
Trust
The public’s belief that what they are watching is real. Integrity failures are ultimately failures of trust.
Brand as ethical promise
A brand is more than a logo: it is a promise to stakeholders about values and conduct, and it is broken when actions contradict it.
Legal but unethical
Law sets out what can be punished; ethics asks what is right. Compliance is a minimum, so an action can be lawful and still wrong.
Stakeholders
Everyone with something at stake in a decision: athletes, coaches, parents, officials, fans, employees, sponsors, media, communities and regulators, including the less visible ones.
Authenticity vs. PR spin
The tension between communicating truthfully and managing perception. Spin may protect a brand short term while eroding trust.

Definitions from the Ethics Cases glossary.

Discussion questions

  1. What due diligence should a league do before letting a crypto exchange sponsor its umpires?
  2. Should athletes who endorse financial products have to disclose how much they are paid?
  3. Was the judge right that endorsers who did not know of a fraud should not be liable? Is that the right ethical standard?
  4. Did the FDIC's 2022 warning create an obligation for sports partners to reconsider?
  5. Should leagues ban whole categories of sponsors, or judge each one?

Sources

  1. Shohei Ohtani and Major League Baseball take a hit over FTX ties — Los Angeles Times
  2. Miami-Dade County and Heat ink naming rights partnership deal with Kaseya — Miami-Dade County
  3. Heat arena, formerly FTX, has a new name: Kaseya Center — AP News
  4. Samuel Bankman-Fried Sentenced to 25 Years for His Orchestration of Multiple Fraudulent Schemes — US Department of Justice
  5. FTX claims against Steph Curry, Tom Brady, other celebs dismissed — CNBC
  6. Judge dismisses most charges against FTX's celebrity boosters — The Verge
  7. FTX lawsuit against Tom Brady, Stephen Curry, Shohei Ohtani, others is narrowed — Reuters