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Sam Bankman-Fried would like FTX’s new management to prioritize paying his legal bills — and put him at the top of the payment list.
Specifically, SBF is asking the bankruptcy court to grant it access to $10 million of FTX’s director and officer insurance policies.
The filing states that these legal expenses do not compensate the company for “all damages … which the insured becomes legally bound to pay by reason of any claim made against them”.
In addition, the insurance “provides priority of payment to an insured person with an unrestricted loss such as Mr. Bankman-Fried,” and requires the company to waive objections to those payments. Added this:
Which means Bankman-Fried could get paid millions of dollars before anyone else sees a dime in the bankruptcy proceedings.
The D&O coverage is needed, the filing said, because the disgraced founder and former CEO of FTX “has been named as a defendant or is otherwise involved in criminal, regulatory, civil and other actions and proceedings that have resulted in — and are The consequences are expected to continue – significant unreimbursed legal fees and other expenses.”
His criminal defense alone is expected to run several million dollars.
SBF is facing 12 charges including multiple counts of fraud and conspiracy, as well as anti-money laundering in relation to the alleged theft of FTX client funds worth $10 billion to prevent his private trading firm Alameda Research from going bust. Money laundering and campaign finance law violations are also covered. , At least $8 billion appears to have been lost, and three former top executives from the two firms have pleaded guilty to fraud charges.
D&O policies are very common, and in many cases — according to filings in it — provide benefits to the company, but only after the primary executives’ claims have been paid.
Along with the federal criminal charges, the filing details that Bankman-Fried faces three lawsuits by regulators — including the Securities and Exchange Commission, the Commodity Futures Trading Commission and the Texas State Securities Board. This is followed by five bankruptcy related cases and seven civil suits.