NWSL’s Voyager Crypto Deal Has Players Out Of Funds Amid Bankruptcy – Sportico.com

NWSL told its players they may have run out of money after cryptocurrency platform Voyager Digital, one of the league’s largest partners, filed for bankruptcy earlier this month.

The Voyager League partnership, announced in December, was notable for both its size and construction. About half of the deal’s value was to be paid to the league in cash, while the other half was intended for individual athletes to invest in cryptocurrencies via the Voyager platform.

Those accounts were never funded, according to several people familiar with the partnership, and now that Voyager is voluntarily entering Chapter 11, it’s unclear how much, if any, players will actually see. In a letter distributed Thursday to its athletes, the NWSL said that “there were no firm answers at this time on whether or when player accounts will be funded.”

The letter, which was viewed by sportyhe also says that if the accounts are unfunded, the league intends to partner with the NWSLPA to share some of the money it received from Voyager.

“The Player Fund has always been designed to be distributed into Voyager’s cryptocurrency accounts, with the aim of educating players about investing in the crypto space,” the letter reads. “As such, there was always risk with regards to the volatility of the cryptocurrency market.”

A representative of the NWSL declined to comment. Representatives of the NWSL and Voyager players union did not immediately respond to a request for comment.

The NWSL deal will attract attention across the sporting world, where cryptocurrency companies have spent a lot of money searching for new customers and market share. For most of 2021, as currencies such as Bitcoin and Ether have rapidly increased in value, cryptocurrency trading platforms and lenders have been running expensive Super Bowl commercials, getting the rights to arena names, securing ads. of jersey and rushed to sign team and league level deals. In recent months, however, much of the market has collapsed, causing huge losses for investors and major problems for some of the largest companies in the industry.

NWSL has received its first year’s cash payment, according to one of the people, and Voyager’s field signage and website advertising remain active throughout the league. The cryptocurrency company is also a partner of the league’s 10th rankth anniversary celebration and remains part of that promotion on the NWSL website.

The league may hope that fulfilling its part of the deal will help its claim for money owed by Voyager, but it is likely that the NWSL (and thus its players as well) will be an unsecured creditor, according to Gregory Moffett, director of Preti. Flaherty Beliveau & Pachios, Chartered LLP and co-chair of the company’s creditors’ rights and bankruptcy practices.

“If it turns out that the requirements the debtor has to assume, or the things the debtor has to do, are inconsistent with his plan to come out of bankruptcy or sell the business or whatever he is planning to do, then [the NWSL contract] could potentially be at risk of rejection, ā€¯Moffett said in an interview.

Two months before Voyager announced its financial woes, the collapse of a major stablecoin rocked the industry. More recently, a major cryptocurrency hedge fund called Three Arrows Capital filed for Chapter 15 bankruptcy (its assets are frozen and its founders’ whereabouts are unknown) and shortly thereafter, both Voyager and colleague Celsius Network have applied for Chapter 11.

The NWSL’s Voyager deal is different from the league’s other crypto deals because of those funded player accounts. As the women’s soccer league grows its commercial footprint, it has found a host of new partners willing and eager to directly support NWSL athletes, many of whom also play on the United States women’s national team and are prominent figures. In July, for example, the league announced a partnership with CarMax that included an extra $ 5,000 for each player on the team with the best regular season record.

In a statement posted on its website last month, Voyager explained what its failure could mean for its customers. The company said its cash reserves were insured and intact in a special type of bank account and should eventually be available for withdrawal. The cryptocurrency in user accounts, however, will likely not be returned in full: Voyager said those options will depend on the restructuring and final outcome of more than $ 650 million in claims against Three Arrows, with whom it had a business relationship. The statement did not directly address marketing engagements such as its NSWL agreement.

The NWSL partnership is probably what is called an “executive contract,” Moffett said, which means there are ongoing obligations on both sides: payment from Voyager; marketing exposure from the league. In Chapter 11 proceedings, those contracts are often particularly at risk of rejection, he said.

Moffett added that it will likely be a long time before the league has its resolution. There is typically an exclusive multi-month window for the debtor to work out a reorganization plan, but any subsequent extension could push it to a year or more.

The NWSL letter also says Voyager asked the league if it could share an update directly with players. The league says Voyager will send out that update separately. It is unclear whether this has already happened.

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