Recent news of crypto-loans company BlockFi filing Chapter 11 bankruptcy, has shocked a few pro-athletes. NBA star Cade Cunningham happens to be among that group. The #1 NBA draft pick of 2021 had a lucrative sponsorship deal with the exchange, including a signing bonus paid in 100% Bitcoin (BTC).
And it’s not the end of the crypto-token. It’s still a 5-figure asset. It can be turned into liquid cash today.
Instead, it is the lender that controls his account with the digital assets, that’s Cade and other professional athlete’s problem right now.
The Deal
In August 2021, BlockFi announced the sponsorship deal with Detroit Pistons’ point guard. The deal involved Cunningham collaborating with the exchange to be an ambassador to DeFi lending.
Cunningham had no role in day to day operations. Instead he would use his fame to raise awareness of cryptocurrency investments and lending options. Cade would do this by by referring his millions of followers to the crypto-company’s educational resources on-line.
Cade Cunningham Got Bitcoin Bonus For Signing To BlockFi
In exchange for using that fame, the NBA star agreed to a payment and initial signing bonus that would be in Bitcoin. And that BTC would be put in the Pistons player’s personal BlockFi wallet.
“I’m excited to partner with BlockFi to really diversify my portfolio and manage my crypto assets, especially as they become more important in personal finance,” said Cunningham at the time. “For me, it’s not just about setting up myself for financial success long-term, but also to educate future generations on financial wellness.”
A signing bonus is a lump sum payment acquired as a result of a player signing a uniform player contract or extension. Despite not going into speculation about how much that deal would be, those usually involve hundreds-of-thousands to millions of dollars.
While some reported inaccurately on Cade’s bonus being from his NBA contract, it was not. This signing bonus that was from the crypto-lender, not the NBA. A gift for becoming an ambassador to the brand.
If The Top Draft Pick Didn’t Convert the Crypto To Fiat Already
To make matters worse, BlockFi currently has its withdrawals paused for all users. If the NBA player kept a large sum of his bitcoin purses in the exchange, he could potentially lose it all.
Potential Legal Troubles For Cade Cunningham ahead
BlockFi’s bankruptcy is different from FTX’s collapse. Partially because Sam Bankman-Fried’s case ended up being the kick-start to the market crash that brought down BlockFi.
With that said, Cunningham could find himself in legal trouble in the near future.
Aside from potentially not receiving the money that he is owed, Cunningham is now in a position to legally answer for promoting a failed cryptocurrency exchange.
With the FTX meltdown as an example, celebrities like Tom Brady, Larry David, and Stephen Curry — who all got paid to sponsor the exchange — are now litigious in a civil lawsuit that claims they publicly endorsed a “Ponzi scheme” run by Sam Bankman-Fried’s exchange.
Not only those but several other NBA entities who had crypto sponsors are at risk of lawsuits behind this.
Hopefully however, people will take responsibility for their own decisions. Cunninginham’s decision to promote cryptocurrency was not bad. The crypto-market is still rolling day to day. Instead, it was BlockFi’s decision to loan $650-Million to Sam Bankman-Fried and insolvent exchange, FTX, that crashed their company. Loaning money to a company without verifying their true asset value is a sure formula for disaster.
