FTX Founder’s Petition to Get Legal Fees Reimbursed Slammed by Lawyers & Creditors
- The creditors committee and lawyers representing FTX filed objections regarding Bankman-Fried’s request for reimbursement of legal fees.
- The lawyers representing SBF filed for the crypto entrepreneur’s access to the D&O insurance policy and the $10 million coverage it contains.
- “It would be unfair, inequitable, and contrary to the interests of justice to allow Mr. Bankman-Fried to drain the D&O policies for his sole benefit,” they said.
- Creditors said that D&O coverage only applies “where they make honest decisions in the ordinary course of the business,” which “is not the case” for SBF.
Following the collapse of the popular and disgraced crypto exchange FTX, the crypto industry is being viewed with increased speculation by regulators in the United States. Interestingly, the former CEO and co-founder of the exchange, Sam Bankman-Fried, also known as SBF in the crypto space, has pleaded not guilty to any of the charges put forth by the US authorities. Also, the crypto entrepreneur has filed for reimbursement of the legal fees paid by him, making the creditors committee and the lawyers furious.
On March 15, the lawyers representing the founder of FTX filed a motion seeking SBF’s legal fees to be covered by the directors & and officers (D&O) insurance policies. The motion is pending approval with the judge, and if approval is granted, could put Bankman-Fried at the top of the payout list. Interestingly, the crypto community on social media platform Twitter, along with the creditors committee and lawyers, expressed their disapproval of the situation.
As per an objection filing on March 29, FTX lawyers opposed the crypto entrepreneurs motion and asked the judge to block SBF’s attempts to get his legal fees reimbursed by the court via the D&O insurance policies. This is because the former executive of the crypto exchange would be stepping on other potential claimants.
“It would be unfair, inequitable, and contrary to the interests of justice to allow Mr. Bankman-Fried to drain the D&O Policies for his sole benefit,” read the document submitted by FTX lawyers.
The lawyers pointed out that there are other directors and officers at FTX who are being cross-examined by authorities and might be looking at the same D&O insurance coverage. Therefore, if Bankman-Fried can receive a payout, so can other officers and employees at the crypto exchange.
Furthermore, the Official Committee of Unsecured Creditors of FTX also filed an objection, asking the court to decline the requests by SBF’s lawyers. The Committee said that D&O insurance policies only apply “where they make honest decisions in the ordinary course of the business,” which it argues “is not the case” regarding the crypto entrepreneur’s request.
The creditors committee stated that the FTX founder’s request to allow him to access the D&O funds should be rejected and labeled the former “white knight of crypto” as the “alleged perpetrator of one of the largest criminal frauds in the last decade.”
It is crucial to note here that directors and officers (D&O) liability insurance coverage is responsible for protecting employees, directors, and officers from legal troubles if they are sued for the work done during their tenure at the company. The policies are used to cover legal costs. The creditors believe that the $10 million in coverage policy that the former FTX boss demands should go to making the customers whole and covering the company’s losses.
As reported earlier by BitcoinWisdom, a class action lawsuit, led by Edwin Garrison accused a well-known group of YouTube financial influencers of ruining their viewers’ finances by promoting FTX in exchange for lucrative advertising deals. YouTube influencers like Erika Kullberg, Graham Stephan, Andrei Jikh, Jaspreet Singh, Brian Jung, Jeremy Lefebvre, Tom Nash, and Ben Armstrong have been named in the lawsuit.
A crypto journalist with over 3 years of experience in DeFi, NFT, metaverse, etc. Parth has worked with major media outlets in the crypto and finance world and has gained experience and expertise in crypto culture after surviving bear and bull markets over the years.
