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HomeNewsCrypto Industry Suffers Another Setback as Ferrari Cancels Velas Partnership

Crypto Industry Suffers Another Setback as Ferrari Cancels Velas Partnership

The F1 and its crypto partnership fallout saga continues ahead of the new season.

The racing division of famous automaker Ferrari, Scuderia Ferrari, is the latest to join the rising number of Formula One racing teams who have terminated their ties with their cryptocurrency sponsors. After a tumultuous first year, Ferrari ended its multi-year collaboration deals with Velas Blockchain. Ferrari has severed partnerships with Snapdragon as well, costing the Italian club a net US$55 million in losses before the 2023 season.

In late 2021, Ferrari announced a long-term partnership with Velas Blockchain, with branding appearing on vehicles and driver apparel. The primary objective behind the partnership was to boost fan engagement via NFTs and other joint projects. But, according to RacingNews365, the team did not adhere to the provisions that allowed Velas to produce NFT images. Meanwhile, Velas Blockchain is allegedly facing a financial breach. As a result, now both parties are considering taking legal action.

Another insider informed RacingNews365 that the split from Snapdragon is mutual and that a joint statement will be released soon. Snapdragon is expected to join another F1 team, possibly Mercedes, following the announcement of a major ‘cockpit’ electronics joint venture between its parent company Qualcomm and Mercedes. 

About a quarter of Scuderia’s commercial revenue was generated by the Velas Blockchain, and Snapdragon combined. Now, Ferrari must fill a sizable vacuum in its portfolio as a result of the loss of Velas and Snapdragon. 

This development comes before Ferrari’s plans to unveil its 2023 F1 car on Valentine’s Day on 14th February, though the launch location is yet to be announced.

Read Also: SpaceX launched second ‘cryptographically-equipped’ satellite from Cryptosat

The cryptocurrency landscape has changed drastically over the past year, with the value of cryptocurrencies plummeting alarmingly fast. The most notable illustration of the volatility and fragile financial status of cryptocurrency sponsors in Formula One was kickstarted by the collapse of FTX. In November 2022, after discontinuing its relationship with FTX as the cryptocurrency exchange filed for Chapter 11 bankruptcy, rival team Mercedes suffered a loss of US$15 million. At the time, Team Principal Toto Wolff predicted that most F1 teams might witness a similar effect.

In December, Red Bull Racing and Tezos Foundation cut ties after the blockchain platform apparently decided not to renew their contract due to a lack of strategic alignment. 

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Preetipadma K
Preetipadma K
Preeti is an Artificial Intelligence aficionado and a geek at heart. When she is not busy reading about the latest tech stories, she will be binge-watching Netflix or F1 races!

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