According to McLaren CEO Zak Brown, Formula One will weather the storm caused by the "complete mess" of cryptocurrency exchange FTX's collapse and the contagion it triggered.
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The recent bankruptcy of FTX in the aftermath of an $8 billion liquidity crunch sent panic through the crypto markets, affecting F1 teams. Eight of the teams on the grid have sponsorship relationships with cryptocurrency companies, with F1 itself having a substantial deal with cryptocurrency exchange Crypto.com. FTX was a Mercedes team sponsor, and the controversy caused the German automaker to cancel the partnership on the night of the Brazilian Grand Prix and remove the company’s emblems off its car and assets.
The failure of FTX had an impact on other companies that had loans or financial arrangements with it, and it raised concerns about market contagion amid uncertainty about the reserves of other major exchanges. But, according to Brown, there is no reason to be concerned about the impact on F1, because the crypto market’s strongest participants will survive. He made it plain that he has no concerns about the strength of exchange OKX, which just partnered with McLaren.
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When asked if the crypto meltdown could have a wider impact on F1, Brown said, “The FTX [situation] certainly appears to be a complete mess.” “I compare it to the early days of the Internet.” You had a number of Internet businesses. Many didn’t make it, but companies like Amazon succeeded rather well. “I believe the same will be true for cryptocurrency and blockchain.” You just had so many people flock to it. And the final consequence will be a handful, I’m not sure how many, of true serious players.
Brown also believes that concerns about the long-term viability of crypto sponsors are comparable to concerns about other industries involved in F1. “I think every time there’s a transition in the sport, people wonder, ‘Oh my, what will happen when the tobacco money leaves the sport?'” What happens if this manufacturer withdraws from the sport? “However, the sport is so robust that there always appears to be someone there to step in.” So while it would be awful if there was a lot of impact, I believe the sport will be alright.”
