Scuderia Ferrari has prematurely ended its sponsorship agreement with cryptocurrency company Velas, which leaves the Italian side with an estimated $30 million loss in revenue for the next Formula 1 season.
It was initially reported that Velas had ended the partnership with the Maranello team due to the fact that Ferrari did not allow them to produce Ferrari-themed NFTs. Yet according to recent news, inside sources from Maranello have confirmed for
However, sources familiar with the matter have now told leading UK-headquartered news publication London Insider that “Velas were looking for any excuse” to get out of their contract due to the current state of the cryptocurrency market. The end of the partnership means that the Velas logo will no longer be seen on the racing suits of Charles Leclerc and Carlos Sainz or on the rear-wing of the new car for the 2023 championship, as was the case last year.
Similar to several other cryptocurrency companies, Velas are currently focusing on other priorities and want to scale back their marketing budget, given the fact that the cryptocurrency market itself is very unstable at the moment. For the Italian side, ending the sponsorship deal could not be in fact such a big issue, as Velas’ tokens have decreased in value by 94-percent during the last year. Ferrari will now be looking to replace Velas with other new partners, before or during the 2023 Formula 1 season.
The deals between Formula 1 teams and cryptocurrency companies are starting to quickly decline, just as fast as such companies were looking for partnerships in the most important motor racing category not long ago.
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A lot of the instability in the market was caused by Mercedes’ ex cryptocurrency partner, FTX: the troubled crypto firm BlockFi has filed for bankruptcy in the United States, as the dramatic collapse of FTX continued to reverberate across the industry. Former boss Sam Bankman-Fried, the so-called “crypto king”, resigned and the firm declared bankruptcy.
FTX was seen as “one of the most credible and solid” companies in the crypto market, as explained by Mercedes team principal Toto Wolff a few weeks ago. Yet their collapse has shaken faith in the crypto industry and drawn scrutiny from regulators, also resulting in the future of crypto sponsorship in Formula 1 to be questioned.
The Mercedes boss even warned the entire Formula 1 paddock after the collapse of FTX that the market remains very “vulnerable”, with the Silver Arrows having been left in “utter disbelief” by how fast FTX became no more.
“But this situation is very unfortunate. We considered FTX because they were one of the most credible and solid, financially sound partners that were out there. And out of nowhere we can see that a crypto company can basically be on its knees and gone (in) one week. That shows how vulnerable the sector still is. It’s unregulated and I believe it needs to find its way into regulations because there’s so many customers, investors and partners like us that have been left in utter disbelief at what has happened,” Toto Wolff explained.
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