FTX Seeks to Claw Back $700M in Lawsuit Over Alleged Funds Misappropriation and Influence-Building Scheme

According to a lawsuit filed this week with the U.S. Bankruptcy Court for the District of Delaware, FTX lawyers are seeking to claw back $700 million from K5 Global Technology, its subsidiaries, and the firm’s founders. The attorneys allege that the defendants received funds without undergoing any due diligence, and FTX did not obtain “equivalent value.”

FTX Pursues Legal Action to Recoup $700 Million in Suspected Fund Misuse

FTX lawyers seek to claw back $700 million in funds allegedly provided to K5 Global Technology, SGN Albany Capital, Mount Olympus Capital, and the founders of K5 Global, Michael Kives, and Bryan Baum. The attorneys aim to recover the funds from the defendants following reports of millions being channeled to these companies and founders in an alleged effort to amass influence.

The attorneys maintain that FTX co-founder Sam Bankman-Fried (SBF) sought to utilize Kives and Baum for networking purposes. According to FTX lawyers, two days following the Super Bowl, SBF “gushed about Kives’s access to celebrities and politicians,” and reportedly stated that he is “probably the most connected person I’ve ever met.” Kives, a former aide to the Clintons, is purportedly associated with numerous A-list celebrities and high-profile connections.

“Bankman-Fried stated that Kives and Baum were ‘something of a one-stop shop for relationships that we should utilize,’ and that they could provide ‘infinite connections,’ ‘potential unpaid partnerships with celebrities’ and ‘political relationships,’ and that they and FTX entities could ‘work together on electoral politics,’” the complaint details. The court filing adds:

The FTX insiders, among others, took advantage of the FTX Group’s lack of controls and recordkeeping to perpetrate a massive fraud—lavishly spending the FTX Group’s assets on, among other things, private homes and jets, political and “charitable” contributions, and various investments. The K5 Transaction and Mount Olympus Transaction were two such investments.

While FTX lawyers have filed a petition with the court to pursue the recovery of funds from the alleged K5 transactions, there are doubts about the potential outcome. “700m of the funds were transferred outside the 90-day preference window whereas only 100m were transferred within the 90 days,” an individual commented on Twitter regarding the court filing. “I don’t see how they get more than 100 and if this guy is really connected, he may avoid paying any of that back. I don’t think the estate will get much,” the person added.

In a comment forwarded to Reuters, a spokeswoman for K5 stated that the FTX lawsuit did not have merit. “K5 was under the impression — like many others — that SBF was completely legitimate, and that they were entering into a fair, long-term, and mutually beneficial business relationship.”

Will FTX’s legal pursuit of $700 million from K5 Global and its founders succeed? Share your thoughts and opinions about this subject in the comments section below.

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