Mercedes F1 squad withdrew after the FTX collapsed in 'disbelief'

The bankruptcy of FTX, the cryptocurrency exchange that sponsored Mercedes in Formula 1, has left the company in "disbelief," according to Mercedes.

The brand new Mercedes W13 at Silverstone (Courtesy:
By Mahaksh Chauhan | Nov 18, 2022 | 2 Min Read follow icon Follow Us

On the eve of the Brazilian Grand Prix, the German manufacturer decided to terminate its sponsorship agreement with FTX due to the company’s widely reported problems. After being left with a $8 billion financial black hole, FTX was hit by a liquidity crisis and ultimately filed for bankruptcy. The company’s problems sparked a collapse in the cryptocurrency markets and raised concerns about market contagion, which might have larger ramifications for other major sector players. In recent years, there has been a rush of cryptocurrency sponsors into F1, and the FTX situation has raised concerns that some of those deals may be in jeopardy.

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Utter disbelief

Toto Wolff, the head of Mercedes, stated that although he believes that F1 teams should be involved in the crypto business, what happened with FTX serves as a reminder of its perils. We all understand that crypto has relevance, so it’s difficult, he said. “I firmly believe that blockchain technology will be used for transactions in the future. However, this circumstance is far more regrettable than FTX. We gave FTX some thought because they were one of the most reliable, trustworthy, and financially stable partners available. You can see that a cryptocurrency company can essentially be on its last legs and gone in one week out of nowhere.

Wolff is not the only person who thinks the F1 situation with regard to cryptocurrencies needs to be examined; Ferrari, which is sponsored by blockchain network Velas, says it cannot ignore the developments. Mattia Binotto, the head of the Ferrari team, said: “Undoubtedly, it’s something we need to watch out for and be cautious about. Therefore, there is little we can do right now to monitor. Because it is so difficult to know and forecast, we are keeping an eye on everything.