Sam Bankman-Fried, the former CEO of cryptocurrency exchange FTX, has requested that his defense costs be covered by executive liability insurance funds. This request, if it were to be accepted by the court, would involve dipping into the funds reserved for the reimbursement of platform customers and giving it priority to the various creditors.
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Sam Bankman-Fried wants to prioritize
Sam Bankman-Friedthe former CEO of cryptocurrency exchange FTX, asked the court responsible for his case that his defense costs be covered by the funds of the directors’ liability insurance.
This insurance allows company directors to cover their legal fees in the event that they are sued in connection with their administrative function. However, given the situation facing the FTX company, the use of this insurance would involve drawing on the funds reserved for the reimbursement of platform customers.
What is more or less explicitly stated in the document filed:
” [les assurances prévoient de donner] priority of payment to individual policyholders who have suffered an uncompensated loss, such as Mr. Bankman-Fried. […] Based on the foregoing, Mr. Bankman-Fried argues that there is sufficient cause to lift and vary the automatic stay […] to enable Relm and Beazley to reimburse Mr. Bankman-Fried for covered defense costs that have already been incurred under the directors’ and officers’ insurance policies, and to advance future defense costs […]. »
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The request comes from Sam Bankman-Fried himself, by the way. The latter is involved in so many criminal cases that he would currently find himself forced to pay an amount assessed at 9 figures for his defense.
Indeed, while he was initially confronted with 8 counts to which he pleaded not guilty, the former CEO of FTX was more recently charged with 4 new counts, which relate in particular to electronic fraud and securities fraud.
The new management of FTX, chaired by John Ray III, had previously refused to cover Sam Bankman-Fried’s defense costs with its own funds. However, on the side of the new FTX teams, the amounts invoiced are still quite staggering: John Ray III would be paid $1,300 an hour for his activities within the company. Thus, in January alone, FTX spent $34.18 million on legal costs alone.
The cryptocurrency exchange team will have until March 29 to oppose Sam Bankman-Fried’s request. In the event that SBF manages to obtain court approval, it would become a priority on the list of reimbursements, which would thus put it ahead of FTX’s aggrieved clients.
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Passionate about the world of decentralized finance and the novelties brought by Web 3.0, I write articles for Cryptoast to help make blockchain more accessible to everyone. Convinced that cryptocurrencies will change the future very soon.
Maximilien Prue
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