League of Legends developer Riot Games is getting sued in a California court over its partnership with FTX—the now disgraced cryptocurrency exchange that collapsed in a mountain of fraud in 2022.
The current lawsuit targets Riot Games and the North America League of Legends Championship Series, which partnered with FTX in 2021.
Riot Games develops League of Legends, a multiplayer online battle arena game with millions of concurrent players. The complaint charges that Riot Games should have known about the risks of the products being offered by FTX, which included yield-bearing accounts and crypto tokens they say functioned as unregistered securities, and caused the class members over a billion dollars worth of damages.
Those include players who were advertised to by Riot Games. According to the lawsuit, the class members affected by the fallout from FTX could number in the “thousands, if not millions.”
The suit stems from an official backing Riot Games gave to FTX in 2021.
“We’re proud to announce that FTX is the Official Cryptocurrency Exchange of the LCS,” Riot Games announced in a statement in 2021. “Our seven-year partnership with FTX represents the largest sponsorship agreement Riot has ever signed for an esports league.” That partnership included FTX branding on League broadcasts, news roundups within the game community presented by FTX, and an FTX sponsored Most Improved Player Award.
“FTX Group’s fraud was only able to reach such heights through the offer and sale of unregistered securities, with the willing help and assistance of some of the wealthiest, most powerful, and most recognized organizations and celebrities across the globe,” the suit alleges, including Riot Games with sponsors like Tom Brady, Larry David, and Steph Curry.
The suit notes that Riot Games and the LCS received “substantial compensation” to advertise FTX. “The deal was worth over $25 million in the first two years and tens of millions more though its completion in 2028,” the document says.
It also cites FTX founder Sam Bankman-Fried’s own love of League of Legends.
“By his own admission, SBF is ‘(in)famous’ among investors for playing League of Legends during meetings and phone calls. He acknowledged on Twitter that he played ‘a lot more [League of Legends] than you’d expect from someone who routinely trades off sleep vs work.’ This preexisting connection to a, then, respected and admired entrepreneur likely paved the way for this official partnership.”
In the suit, the plaintiffs claim that FTX’s sponsorship was the most visible logo on broadcasts, enticing unwitting people into buying crypto.
The lawyers for the class-action suit argued that because FTX is currently in federal bankruptcy proceedings, it’s unlikely that any of their victims will receive any compensation for the around $11 billion in losses from the exchange’s collapse, necessitating the suit against Riot Games.
“The Cryptocurrency National Disaster is growing by the billions almost every day,” they argued. “More crypto companies are filing new federal bankruptcy petitions each day, all running for protection from the billions of dollars of losses they directly caused to thousands of investors in Florida and across the globe. This is by far the largest securities national disaster, greatly surpassing the Madoff Ponzi Scheme, and could very likely become a complex international litigation disaster, similar to how the hundreds of thousands of asbestos cases swamped all courts across the globe. Unless a workable, coordinated, and organized structure is established now … the FTX victims will continue to suffer and the only people to benefit will be the professionals in the bankruptcy and civil courts.”
FTX’s spectacular collapse led to the prosecution of its prominent public executive, Bankman-Fried, once a tech golden boy who the financial press dubbed SBF, a proponent of a shaky system of public ethics called “effective altruism.” That philosophy, where executives and titans of industry committed themselves to making as much money as possible so they could donate it and allocate it where they thought it could do maximum good, was quickly revealed to be not much more than a phony front when FTX collapsed—and SBF was convicted of fraud and money laundering.
SBF and FTX Group essentially stole billions of dollars of customer deposits to fund political contributions, risky investments, and enrich themselves before the house of cards collapsed.
“We’re aware of the complaint and deny the claims and intend to fight them vigorously,” Riot Games said in a statement. “We’re just one of a number of well known media personalities, athletes, sports franchises, financial institutions, and other entities who have been sued by these firms in light of the circumstances surrounding FTX.”
