Last week’s frankly spectacular collapse of crypto exchange – and major esports sponsor – FTX has rudely shaken up a gaming world that's often insulated from Wall Street financial scandals. While perhaps a unique event in terms of size, the gaming industry would be wise to learn from this.

Back in 2021, FTX signed a $210 million, 10-year sponsorship deal with famed esports franchise TSM (who would rebrand as TSM FTX). The deal was critical in making TSM the most valuable esports property.  A cynic back then might have worried that a $21 million-a-year sponsorship for a company with annual revenue barely double that sounds too good to be true.

That would unfortunately be correct. Fast forward a year, and FTX imploded after sketchy business practices came to light, with missing funds on the order of billions. Now, TSM finds itself scrambling to wipe the egg off its face and assure the industry that it’s “a strong, profitable, and stable organization.” It even went so far as to dubiously claim that “FTX does not affect any part of TSM’s operating plan, which was set earlier this year," despite a sudden multimillion-dollar hole in its budget.

The ripples have also reached other sectors of the gaming industry. FTX’s collapse has shaken confidence in the Solano blockchain, which powered multiple games with NFTs, such as Star Atlas and Mini Royale Nations. (As if we didn’t need another example of why the cons of blockchain gaming heavily outweigh the pros.)

Could this have all been avoided? Maybe, maybe not. Put it this way: It’s not a good sign when even the Saudi Public Investment Fund  – which has tossed tens of billions of dollars into gaming with little expectation of profit and is hardly squeamish about questionable business partners - didn’t even consider bailing FTX out. In the Wild West that is a (relatively) young gaming industry, more scrutiny of sponsors and partners couldn’t hurt, especially ones showing up and offering suspiciously large sums of money that sound too good to be true.

Featured image: FTX