Riot Games in Legal Trouble for Crypto Frauds

The gaming giant Riot Games find itself in a legal case for complicity in promoting fraudulent actions via a partnership with the now defunct cryptocurrency platform, FTX.

Riot Games, popular for its game development, is currently confronting a legal challenge in California. The accusation brought against the company asserts its involvement in promoting fraudulent activities through its association with FTX, a cryptocurrency exchange platform which is no longer operational.

On the third of August in 2021, Riot Games declared a partnership with FTX. This surprising move came just after Riot Games decided to prohibit TSM, an eSports organisation, from using the FTX branding on their LCS team jerseys. The decision to block was made subsequent to the exchange's unexpected foray into eSports earlier that year.

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This business deal with FTX enabled Riot Games to have FTX’s branding on the Most Improved Player Award. In addition to this, FTX's logo would also be visible in the gold score bug which pops up during every league match. This collaboration was deemed as an evolutionary step in the merging of mainstream gaming with the bourgeoning world of cryptocurrencies.

Riot Games in Legal Trouble for Crypto Frauds ImageAlt

However, following the collapse of FTX, Riot Games made attempts to disentangle itself from the company. It proceeded to file a motion in FTX's bankruptcy case with the aim to terminate their $96 million agreement. This move was arguably a bid to maintain their reputation and image amidst the turbulent situation.

Riot Games Accused in Connection with FTX's Fall

Several years later, on the seventh of March 2024, Riot Games found itself in the precarious position of being sued. Numerous plaintiffs stepped forward alleging that Riot Games had played a role in attributing to the downfall of FTX. They contended that by actively promoting FTX, Riot Games indirectly contributed to the eventual crash of the exchange's associated properties.

The lawsuit essentially claims that Riot Games and the eSports league in its entirety breached several laws that aimed to prevent fraud. Alongside these claims, the plaintiffs are also trying to achieve a class-action status for the case. This would allow other affected parties to attach their names to the lawsuit. Overall, fourteen plaintiffs have already been named in the legal action against Riot Games.

The accusations brought forward in this lawsuit recognize the influence of the internet, social media platforms, and other emerging platforms. The suit mentions these mediums as catalysts that enable fraudulent investment schemes to reach investors globally. Riot Games, in this case, is accused of being complicit with FTX's fraudulent actions.

Interestingly, Riot Games wasn't the only entity facing legal scrutiny for their association with FTX. A number of celebrities, who were previously promoters for the cryptocurrency exchange, have also faced legal challenges. These individuals are being held accountable for their role in promoting the fraudulent investment scheme.

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The Aftermath of the Riot Games and FTX Partnership

From Riot Games' multi-year deal with FTX, Riot received only a small portion of the agreed upon amount, much like TSM and a number of other companies that had partnered with FTX. The cryptocurrency company, led by its former CEO Sam Bankman-Fried, was known for its lavish investments. It was reported that they compensated celebrities with millions for merely a few days' worth of promotional work.

The lawsuit filed against Riot Games is one among several litigations faced by FTX following the collapse of their operations. These lawsuits serve as a stark reminder of the potential risks associated with collaborations in the volatile and unpredictable cryptocurrency sector. The fallout from the Riot Games and FTX partnership heavily underscores the need for considerable caution when navigating through the world of eSports and cryptocurrency collaborations.

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