Sam Bankman-Fried is facing 12 charges in connection with his mismanagement of FTX and wants FTX to cover his legal costs first. Faced with the refusal of SBF’s request by FTX’s new management, Sam Bankman-Fried has gone to court. If the court approves his request, Sam Bankman-Fried could benefit from millions even before the platform’s aggrieved creditors. Meanwhile, a new report showing SBF’s responsibility for the collapse of FTX has just been released.
Sam’s legal costs Bankman-Fried must be borne by FTX
While the new management of FTX is scrambling to repay funds from creditors and exchange users, the platform’s former CEO made a bizarre request. According The Block, Sam Bankman-Fried, sued for his calamitous management of FTX, requested that his legal costs be reimbursed and paid by FTX.
The request for Sam Bankman-Fried was rejected by the new management of FTX. The former CEO of FTX then turned to court. For the lawyers of Sam Bankman-Fried, their clients’ legal costs must be covered by FTX’s directors’ and officers’ liability insurance. The platform had notably taken out this type of insurance with Relm Insurance and Beazley Insurance.
Will the court rule in favor of Sam Bankman-Fried? No one can accurately predict that. When we remember that SBF has been freed despite the evidence of his guilt, it is better to expect anything. What we do know, however, is that if his request is accepted, Sam Bankman-Fried will get millions of FTX in priority. All this long before the creditors and users of FTX whose funds have been blocked since last November…
New report points to SBF’s responsibility in FTX’s bankruptcy
The strange request Sam Bankman-Fried comes as a new report points to his individual responsibility for the collapse of FTX. Indeed, according to court documents consulted by the Financial Times, nearly $3.2 billion of FTX was transferred to a circle of FTX agents. By himself, Sam Bankman-Fried received $2 billion. The rest of the funds were transferred to 5 of his close associates.
According to court documents, these funds were transferred in the form of loans and payments. Funds came mainly from Alameda Research, a crypto trading hedge fund affiliated with FTX. According the secrets of a former FTX worker this hedge fund was borrowing funds from clients FTX without their knowledge.
There is no doubt that Sam Bankman-Fried was responsible for the collapse of FTX. For some observers, he should have been in jail for what he did. However, he was able to buy his freedom in exchange for $250 million in bail. His request to use FTX’s insurance policy to cover his legal costs is a new test for American justice. It is unfair to use FTX funds to pay SBF before the direct victims of his mismanagement of the platform.
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