FTX sues Bankman-Fried’s friends to recover $700 million

going through bankruptcy proceedings cryptocurrency exchange FTX filed a lawsuit against the partners of former CEO Sam Bankman-Fried (SBF) and related firms, demanding the return of $700 million in investments. This is reported by Reuters.

The defendants named are K5 Global, Mount Olympus Capital and SGN Albany Capital, as well as affiliated entities and co-owners Michael Kives and Brian Baum.

In the filing, FTX described SBF as a “profligate benefactor” who “showered” Kives, Baum, and K5 Global with cash as part of a scheme to misappropriate company assets for personal use.

In 2022, Bankman-Fried authorized transfers of $700 million to the defendants. The former CEO of the platform hoped to secure financing to rescue FTX a few days before filing for bankruptcy in November 2022, according to the suit. He relied on the connections of Baum and Kives among celebrities and in business circles.

SBF described the latter as “probably the person with the greatest connections he had ever met” and as a “universal marketplace” for political relationships and partnerships with celebrities. Some of them he could have cultivated during his work for Hillary Clinton, when she was a senator from New York.

According to the document, Bankman-Fried dismissed concerns from FTX staff that K5 was trying to mislead the platform’s leadership. He continued to allocate funds in an effort to bolster his own political and social influence.

The former CEO authorised investments in K5 projects that enriched Kives and Baum, with no return for the exchange or its customers, the document states.

In one such deal, an SBF-controlled company used FTX funds to acquire a minority stake in the tequila brand “818” from Kendall Jenner, at a time when the company’s assets were valued at only $2.94 million.

K5 said the allegations in the suit are unfounded.

“Like many others, we believed that FTX was fully legitimate; they engage in fair, long-term and mutually beneficial business relationships,” said a spokesperson for K5.

U.S. prosecutors charged Bankman-Fried with 13 criminal counts. He pleaded not guilty to all counts.

Earlier, the Metropolitan Museum of Art in New York agreed to return $550 000, donated by the exchange.

Earlier, FTX lawyers sought the return of $4 billion from Genesis, the bankrupt crypto-lending platform.

The team filed a lawsuit against Bankman-Fried and other former executives over the purchase of Embed at an inflated price.