Mercedes has suspended its deal with cryptocurrency exchange service FTX after the company filed for bankruptcy.
According to the GuardianFTX, which is based in the Bahamas but is run from the US, ran into difficulties when founder Sam Bankman-Fried was alleged to have used billions of dollars worth of FTX’s own cryptocurrency, FTT, to provide collateral in the loans.
Last Sunday, Binance, another cryptocurrency exchange and backer of Alpine, sold its FTT holdings worth around $500 million, citing “recent revelations that have come to light” as the cause.
As a result, markets panicked and users sought to withdraw $6 billion worth of crypto tokens from FTX in just three days.
The US Securities and Exchange Commission (SEC) later launched an investigation into FTX over concerns about the alleged misuse of customer deposits.
On Friday, FTX announced that it, along with 130 affiliated companies, filed for bankruptcy.
In light of these events, Mercedes removed the company logo from its car ahead of the Sao Paulo Grand Prix weekend.
“As a first step, we have suspended our partnership agreement with FTX,” Mercedes was quoted as saying. by Motorsport.com.
“This means the company will no longer appear on our race car and other brand assets starting this weekend. We will continue to closely monitor the situation as it evolves.”
There have been concerns about the security of cryptocurrencies and their volatile nature, but Mercedes team boss Toto Wolff said earlier this year that “you can’t shut yourself off from modern technology.”
“It’s definitely an area that will grow,” Wolff said.
“When we look back 10 years from now, having to make payments that take two days and can’t be made outside of business hours is something that will be a relic of the past. And this is where cryptocurrencies are coming in.”
Formula 1 is heavily involved with cryptocurrency, with several teams having sponsorships with various exchanges.
The Miami Grand Prix was sponsored by Crypto.com.
It’s unclear how the collapse of FTX may affect Mercedes in terms of sponsorship, as the two announced a “new long-term partnership” earlier this year.
Speaking after the announcement, Wolff said FTX was in line with Mercedes’ “relentless pursuit of performance.”
“We are very excited to welcome FTX, one of the world’s leading cryptocurrency exchanges, to the Mercedes-AMG Petronas F1 Team,” the announcement read.
“Their innovative spirit and creative energy in a rapidly developing global industry make them an ideal partner in our own relentless pursuit of performance.
“Together, we look forward to creating new and exciting opportunities to engage with our fans and provide them with world-class experiences.”
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