Former FTX CEO Sam Bankman-Fried seeks insurance coverage for legal expenses Former FTX CEO Sam Bankman-Fried seeks insurance coverage for legal expenses
His lawyers filed the motion on March 15, seeking financial assistance in what experts believe will be nine-figure territory.
2 min read
Updated: Jul. 22, 2023 at 12:27 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
Sam Bankman-Fried is seeking the court’s assistance in giving priority to the reimbursement of his legal fees. Sam Bankman-Fried, the CEO of FTX, has been seeking the court’s assistance in prioritizing reimbursing his legal fees.
SBF’s lawyers want to get paid
The move comes after Bankman-Fried was named as a defendant or involved in various criminal, regulatory, civil, and other actions resulting in significant unreimbursed legal fees and other expenses.
To cover these costs, FTX’s legal representative has formally asked insurance providers to either provide upfront financial assistance or reimburse Bankman-Fried’s expenses related to his defense, utilizing the company’s directors and officers’ (D&O) insurance.
According to motion:
“Mr. Bankman-Fried has been named as a defendant or is otherwise involved incriminal, regulatory, civil, and other actions andย proceedings that have resulted inโand can be expected to continue to result inโsignificant unreimbursed legal fees and other expenses.”
The insurance policies held by Bankman-Fried are intended to provide coverage for precisely this type of situation. He informed several insurers about the pending claims, also known as the “Pending Claims.”
According to Relm, the primary carrier on the directors and officers (D&O), policies mentioned in this motion, reserve its rights to assess coverage and state that Bankman-Fried must seek a modification of the stay either by agreement with the Debtors or through a motion before any payments covered by the policies can be made.
Liability insurance, as a type of insurance policy, is designed to shield individuals from personal financial losses if they are sued due to their service as a director or officer of a business or any other kind of organization. This insurance policy is meant to cover the legal bills of founders and corporate executives, including legal expenses, fees, and other costs that may arise due to a lawsuit.
SBF’s legal bills piling up
Meanwhile, in February, Bankman-Fried was charged with four additional criminal counts by a federal judge presiding over his case, which brings the total to 12 criminal charges against him — eight conspiracy charges related to fraud plus charges of wire fraud and securities fraud.
Experts say his legal costs are estimated to be in the nine-figure range.
In February, CryptoSlate reported that Bankman-Fried will likely have to hire a tech expert to monitor his bail condition after it was revealed that he used a VPN to watch the Super Bowl and play League of Legends.
In January, FTX had paid more than $34.18 million in various legal fees. Additionally, FTX’s new CEO and chief restructuring officer, John J. Ray III, is currently receiving a salary of $1,300 per hour, totaling more than $300,000.
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Dorian Batycka
Dorian Batycka is a journalist interested in art and technology. He has previously contributed to CoinDesk, Decrypt, Artforum, Artnet News, the Art Newspaper, and many others. He can be found on Twitter and Instagram @temp_projects, where he often memes his way through current financial and art news, scandals, and events.
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FTX
FTX is a defunct cryptocurrency exchange, currently in bankruptcy proceedings, that was founded by Sam Bankman-Fried and Zixiao “Gary” Wang in May 2019.
Sam Bankman-Fried is the former CEO, and co-founder of defunct crypto exchange FTX and Alameda Research.