Mercedes becomes first F1 team to drop crypto sponsor following market collapse

Mercedes have become the first Formula 1 team to drop crypto sponsor FTX amidst the global crypto market collapse.

The 2022 F1 season started with a plethora of crypto associations for F1 teams. However, amidst the global slowdown, what has been evident has been the increasing drop in the valuation of the crypto market suffering from serious divestment (and a downturn in market sentiment).

As a result, the partnerships that F1 teams enjoy at the moment could be at a risk sooner rather than later.

Mercedes are the first F1 team to bite the bullet. The team released an official statement informing the termination of its partnership with FTX, its official crypto sponsor. The statement read:

"As a first step, we have suspended our partnership agreement with FTX. This means the company will no longer appear on our race car and other branded assets from this weekend. We will continue to monitor closely the situation as it evolves."

The drama surrounding FTX first surfaced several days ago when the exchange was plunged into a liquidity crisis at its affiliated Alameda Research company. According to reports, FTX was left facing an $8 Billion black hole in its finances.

According to Motorsport.com, after Mercedes announced its plan, FTX announced that it was filing for bankruptcy proceedings. The report from Motorsport.com states:

"On Friday, just a few hours after Mercedes announced its plan, FTX announced that it was filing for Chapter 11 bankruptcy proceedings. Its founder and CEO Sam Bankman-Fried resigned from his role, with John J. Ray III taking over."

The report further stated:

"The FTX collapse has already prompted action from US authorities, with widespread reports suggesting that the SEC will investigate whether or not there was any criminal activity in how FTX handled customer deposits."

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Mercedes forced to backtrack on its association with cryptocurrency

One of the key reasons why the Silver Arrows announced their partnership with FTX was the team's endeavor to grow and evolve with technology. CEO and Team Principal Toto Wolff stated:

"You can't shut yourself down to modern technology. It's definitely an area that will grow. When we are looking back in 10 years time, having to make payments that take two days and can't be done outside of week hours, it is something that's going to be a relic of the past. And this is where cryptocurrencies are coming."

With the global ecosystem not conducive to cryptocurrency and the crypto market taking a serious beating, it makes sense for Mercedes to keep its powder dry until the situation gets better in the future.