Good day everybody,
Welcome to CryptoGod-1's blog on all things crypto. Today I will be revisiting Sam Bankman-Fried, as it has recently emerged that he is looking for FTX insurance to cover his legal fees, meaning he would get a 'pay out' from the collapsed exchange before any of the customers who are owed Billions, while it has also emerged that he, along with his inner circle, took roughly $3.2 Billion out of the exchange to help pay for their lavish lifestyles.
Insurance to Cover Legal Fees
According to reports former TX CEO Sam Bankman-Fried is requesting to make use of the crypto exchange’s director and officer liability insurance to cover his legal bills. This came to light when his lawyers made a request in this regards via a court filing on Wednesday the 15th of March 2023. This is quite the radical turn of events, as basically if Bankman-Fried does indeed get approval then it would place the former billionaire at the front of the line for an FTX pay out, ahead of all of the existing creditors.
Bankman-Fried is facing a litany of criminal charges including fraud following accusation of wrong doing at the crypto exchange he founded FTX. His trial is scheduled to take place in October and if the outcome is one of guilty then he could potentially be facing the rest of his life behind bars. According to experts his legal costs could be in the millions of dollars, meaning if they court order is approved then he could cover that via the company’s director and officer insurance plan for
“the reimbursement and payment of his defence costs.”
The insurance for director and officer liability is generally in place to protect executives of a company in the event that they are the target of a lawsuit. The policies for FTX are held with Relm Insurance and Beazley Insurance and these are the policies which Bankman-Fried wishes to access. He has also requested that FTX agree that the insurance policy
“provides priority of payment to individual insureds with un-indemnified loss, such as Mr. Bankman-Fried.”
In other words, Bankman-Fried is looking to ensure he is top of the queue when it comes to the insurance pay out, ahead of any other potential liabilities and creditors the crypto exchange owe money to. The reason he was forced to go via his lawyers and a judge was because the new leadership at FTX refused to agree to this request, and its seem likely they will continue their stance of being against Bankman-Friend getting any more benefits from the company unless they are directly instructed to do so by the courts.
The filing issued by Bankman-Fried's lawyers read, in part:
"Based on the foregoing, Mr. Bankman-Fried submits that ample cause exists to lift and modify the automatic stay [...] to allow Relm and Beazley to (a) reimburse Mr. Bankman-Fried for covered Defense Costs that have already been incurred under the D&O Policies, and (b) advance future covered Defense Costs unless and until the Defense Costs no longer qualify as Non-Indemnifiable Losses under the terms of the D&O."
Where has the money gone Sam?
To add to the insulting nature of this request, it has also been revealed that during the course being the CEO of FTX, Sam Bankman-Friend and his inner circle of friend had managed to transfer a total of $3.2bn into their personal accounts through “payments and loans” from the cryptocurrency exchange. This is according to U.S. bankruptcy court filings in Delaware made by FTX’s new management. As part of this sum, Bankman-Fried alone took more than $2bn (£1.7bn) from entities linked to FTX.
With FTX having a valuation of around $40 billion at one point was left in a bankruptcy position in November 2022 when it was unable to pay its creditors. The funds which were transferred into their personal accounts were mainly from Alameda Research, a crypto-trading hedge fund affiliated with FTX which Bankman-Fried also founded. He had installed Caroline Ellison as the CEO of Alameda Research at the time and was also apparently involved in an intimate relationship with her. Both Caroline Ellison and two others, Gary Wang and Nishad Singh, received a total of more than $800m from these personal transfers. They are all working and cooperating with prosecutors having plead guilty, except for Wang who has not been located since he left FTX. Caroline Ellison received $6m and is known to have admitted that Alameda had an unlimited line of credit on FTX to cover their trading expenses between 2019 and 2022.
According to the new chief executive of FTX, John Ray, the $3.2 billion did not include the $240 million which is known to have been paid in political and charitable donations from Bankman-Fried and co, nor did they include for the purchase of luxury property in the Bahamas. This is all being revealed as the new leadership of FTX is determined to raise as much money as possible from its assets, while also requesting a return of the political and charitable donations, to help reimburse those who were impacted by the crypto exchange's collapse.
One would seriously have to question why Bankman-Fried is looking for his legal expenses to be covered considering the amount he has reportedly taken from the company. However, they is the way things work. If he has indeed taken all that money then one can be certain it has long since been laundered through other channels and put elsewhere to ensure the police and government cannot get their hands on it. Instead he is playing the 'poor' card, all the while staying at his parents mansion while awaiting trial.
So there we have it, more news emerging about Bankman-Fried and how little regard he seems to have for anybody else. While I can accept and understand someone wanting to make use of insurance in a position like he is in, it reeks of ignorance towards everybody else who is out of pocket after his actions. Add to that the amount of money that Sam and his inner circle removed from the exchange and its subsidiaries and then one really gets a distaste for his latest actions. It will be interesting to see how this story develops within the courts and whether or not he will indeed get the legal fees covered.
Have a great day.
** I first posted this story on Medium on the 17th of March 2023, which can be found here: https://medium.com/@1r3n9project/sam-bankman-fried-wants-ftx-to-cover-his-legal-fees-acd577715087?sk=be91512607968f791d8853a837ca2b26 **
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