Two filings made available on the website of Kroll, FTX’s restructuring advisor, on March 29th offer the response of the company’s lawyers, as well as of the Official Committee of Unsecured Creditors, to Sam Bankman-Fried’s request to have his legal fees covered by the company’s D&O Policies. The documents are filed under the numbers 1183 and 1184.
FTX and Its Creditors Oppose SBF Request to Have D&O Cover His Legal Fees
This Wednesday, both the Official Committee of Unsecured Creditors and FTX’s lawyers offered their response to Sam Bankman-Fried’s request to have the company’s D&O insurance policy cover his legal fees. As may have been expected, both parties strongly oppose the request, and find that SBF is not entitled to coverage.
The creditors find that Bankman-Fried’s claim is not valid as it covers directors and officers “where they make honest decisions in the ordinary course of the business” and characterize FTX’s former CEO as the “alleged perpetrator of one of the largest criminal frauds in the last decade”. The company’s lawyers, in turn, call the request “inequitable”, “unfair”, and a “drain” on the firm’s resources. They also argue that if the court approves SBF’s request, the decision should be broad enough to cover the other senior officials of FTX that are also facing government inquiries.
On March 15th, Sam Bankman-Fried’s lawyers requested that the court orders FTX to enable its former CEO to access up to $5 million from the firm’s D&O Policy to help him cover legal expenses. The situation with Bankman-Fried’s defense is already complex as it is unclear how much money he actually has left previously having claimed to have only about $100,000. It became even more complicated after it was revealed on Wednesday that SBF’s father is paying the lawyers with Alameda Research’s money he was gifted before the collapse.
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SBF’s Bail Conditions Tighten as New Charges Are Pressed Against Him
While the initial charges against Sam Bankman-Fried were shocking in their own right—and carried a maximum prison sentence of well over 100 years—the US authorities appear to be continuously able to find more and more of his wrongdoings. In late February, a new indictment against FTX’s former CEO was filed bringing the total number of charges up to 12.
This month saw the pressure ramp up even further. Earlier this week, Federal Prosecutors in Manhattan alleged that Sam Bankman-Fried bribed Chinese officials with more than $40 million in cryptocurrencies in an effort to unfreeze Alameda Research’s wallets that were frozen at the time. At the same time, the rules surrounding SBF’s $250 million bond were made significantly more restrictive.
According to the court’s decision, FTX’s former CEO is banned from accessing a wide range of websites and from communicating with his former colleagues. Additionally, a security guard is to be posted an is to prevent any visitors from bringing any electronic devices onto the premises where Bankman-Fried is located. Along with criminal charges, SBF is facing civil lawsuits filed by the SEC and the CFTC though the regulators have agreed not to pursue them until the DoJ trial is finished.
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