FTX Launch Legal Pursuit to Recover $700 Million from Bankman-Fried Associates and Related Funds

Cryptocurrency exchange FTX has embarked on a legal endeavor to reclaim a substantial sum of $700 million. The target of this pursuit is a group of individuals connected to the founder of FTX, Bankman-Fried. 

FTX alleges that the individuals, including Bankman-Fried’s friends and affiliated funds, owe this significant amount to the exchange. 

FTX Files Multi-Count Lawsuit Seeking $700 Million Against Former Affiliate Investment Firms

FTX initiated legal proceedings by filing a lawsuit in the United States Bankruptcy Court for the District of Delaware. The lawsuit was filed on June 22 and it involves 16 separate legal claims or charges against the defendants. 

These charges likely pertain to alleged wrongdoings or breaches of contractual obligations by the investment firms, as specified in the lawsuit. FTX’s primary objective through this legal action is to seek compensation amounting to over $700 million from the defendants.

The companies named in the lawsuit are K5 Global, Mount Olympus Capital, and SGN Albany Capital. Additionally, individuals involved include Michael Kives and Bryan Baum, who co-own K5 Global. 

It’s worth mentioning that Michael Kives has worked as an agent for the CAA talent agency and previously served as an aide to Hilary Clinton.

The lawsuit alleges that these entities and individuals were previously connected to FTX. It specifically highlights that the CEO of FTX, Sam Bankman-Fried, attended a social event hosted by Michael Kives in 2022. 

The filing suggests that FTX believes these parties may be responsible for certain actions or breaches that have caused harm or losses to FTX.

Moving forward, the suit claimed that a huge amount of $700 million was transferred to Kives, Baum, and K5 Global from Alameda Research, an FTX-affiliated crypto trading firm.

FTX believes that the transfer was constructed as a deal connected with shell companies SGN Albany and Mount Olympus Capital.

The lawsuit aims to retrieve money that was initially transferred from Alameda Research to SGN Albany Capital. It alleges that these funds should not have ended up with SGN Albany Capital in the first place.

The lawsuit also seeks to recover funds transferred from individuals named Michael Kives, Bryan Baum, and SGN Albany Capital to Mount Olympus Capital. According to the lawsuit, these transfers were deemed improper or unauthorized.

K5 Global Said that the Lawsuit was without Merit

In a recent statement, the K5 spokesperson claimed the lawsuit is “without merit.”

“K5 is a Venture Capital firm with over $1 billion in assets under management (apart from any funds from SBF and his affiliates) and has investments in 148 companies. 

In mid-2022, an affiliate of Sam Bankman-Fried and Alameda bought a third of K5’s general partnership for cash and stock and ultimately made a $400 million investment in certain funds managed by K5,” said the spokesperson.

The spokesperson added that “K5 was under the impression — like many others — that SBF was completely legitimate and they were entering into a fair, long-term, and mutually beneficial business relationship. Our belief is that the lawsuit is without merit.”