{"id":19313,"date":"2023-03-30T20:04:00","date_gmt":"2023-03-30T20:04:00","guid":{"rendered":"https:\/\/crowdfundjunction.com\/blog\/former-ftx-ceo-seeks-10m-insurance-fund-for-legal-defense-request-opposed-by-ftx-debtors-and-unsecured-creditors-bitcoin-news\/"},"modified":"2023-03-30T20:04:00","modified_gmt":"2023-03-30T20:04:00","slug":"former-ftx-ceo-seeks-10m-insurance-fund-for-legal-defense-request-opposed-by-ftx-debtors-and-unsecured-creditors-bitcoin-news","status":"publish","type":"post","link":"https:\/\/crowdfundjunction.com\/blog\/former-ftx-ceo-seeks-10m-insurance-fund-for-legal-defense-request-opposed-by-ftx-debtors-and-unsecured-creditors-bitcoin-news\/","title":{"rendered":"Former FTX CEO Seeks $10M Insurance Fund for Legal Defense, Request Opposed by FTX Debtors and Unsecured Creditors \u2013 Bitcoin News"},"content":{"rendered":"

(Originally posted on : Bitcoin News )<\/b>
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Court filings reveal that the FTX co-founder is seeking access to a $10 million insurance plan to cover his attorney fees. FTX debtors and unsecured creditors have opposed Sam Bankman-Fried\u2019s request, arguing that every dollar spent on his defense is \u201cone less dollar\u201d available to cover the losses of the debtors.<\/strong><\/p>\n

FTX Debtors and Unsecured Creditors Oppose Sam Bankman-Fried\u2019s Request for D&O Funds<\/h2>\n

Sam Bankman-Fried<\/a> (SBF), the former CEO of FTX, is seeking access to a $10 million legal insurance fund to cover his defense expenses. The filing notes that FTX\u2019s $10 million director and officer (D&O) insurance policy covers individuals who are \u201clegally obligated to pay on account of any claim first made against them.\u201d However, FTX debtors and the committee of unsecured creditors have criticized SBF\u2019s request, arguing that granting him access to the insurance funds would harm the debtors and cause \u201cmaterial prejudice.\u201d<\/p>\n

\u201cThus, for every dollar extended by the insurance carrier to Mr. Bankman-Fried\u2019s defense costs, there is one less dollar to pay the WRS Debtors\u2019 covered Losses,\u201d the debtors declare.<\/p>\n

The debtors emphasize that the insurance policy excludes claims arising from \u201cviolations of securities laws, violations of money laundering laws, and any willful or fraudulent acts or omissions.\u201d The lawyers explain that the D&O policy belongs to the debtors\u2019 estates, and therefore, the court should not grant Sam Bankman-Fried unrestricted access to it.<\/p>\n

Instead, the debtors believe that the court should require SBF to adhere to the bankruptcy court\u2019s 2016 compensation rules. Although SBF argues that depleting the D&O policy would not harm the debtors\u2019 estate, the debtors and unsecured creditors strongly disagree, stating that this assertion is \u201cflat wrong.\u201d<\/p>\n

The court filing adds:<\/p>\n

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Mr. Bankman-Fried is also wrong in claiming that coverage for the debtors\u2019 estate is \u2018hypothetical or speculative\u2019 and that the debtors \u2018have no present contractual interest in the proceeds of the D&O policies.\u2019 As noted above, the debtors have retained pool counsel to represent certain current or former employees of the debtors, whose fees are an insurable expense.<\/p>\n<\/blockquote>\n

The recent objections to SBF\u2019s request for D&O funds are a result of the allegations that he has been using Alameda funds to cover his legal defense expenses. According to sources cited by Forbes, SBF is purportedly using a gift of $10 million he gave to his father in 2021 to pay for his white-collar legal team.<\/p>\n

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\nTags in this story
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Do you think Sam Bankman-Fried should be granted access to the $10 million legal insurance fund for his defense expenses, or should the court require him to comply with the bankruptcy court\u2019s 2016 compensation rules? Share your thoughts in the comments below.<\/strong><\/em><\/p>\n

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\nJamie Redman <\/h6>\n

\nJamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today.

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Image Credits<\/b>: Shutterstock, Pixabay, Wiki Commons<\/em><\/p>\n

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