Mar 16, 2023
Former FTX CEO Seeks Insurers to Cover Legal Fees
Sam Bankman-Fried, the former CEO of FTX, is looking to use the exchange’s insurance policies to cover his legal expenses, as revealed in a court filing on March 15th. The motion filed by his legal counsel requested that Relm Insurance and Beazley Insurance, the two insurers of FTX, advance or reimburse his defense costs and fees under directors and officers (D&O) insurance policies.
The filing outlined that the policies provide “priority of payment to individual insureds with un-indemnified loss like Mr. Bankman-Fried.” This means that Bankman-Fried would be the first in line to receive any payouts from the FTX insurance policies. The motion also asked the court to lift and modify the automatic stay to allow the two insurers to reimburse Bankman-Fried for any covered defense costs that have already been incurred and to advance future covered defense costs unless they no longer qualify as non-indemnifiable losses.
Directors and officers liability insurance, as defined by Investopedia, is designed to protect individuals from personal losses if they are sued as a result of serving as a director or an officer of a business or other type of organization. This includes covering legal fees and other costs associated with a suit.
Responses or objections to the motion must be filed by March 29, 2023, with a hearing scheduled for April 12th if required. Bankman-Fried is asking the court to grant the relief request without further notice should no responses or objections be filed.
The former CEO is currently facing multiple criminal, regulatory, insolvency-related and civil actions, including one criminal proceeding, three federal and state regulatory proceedings, and five insolvency-related proceedings, as well as seven legal actions. On February 23rd, Bankman-Fried was charged on four new criminal counts by a federal judge, amounting to twelve criminal charges against him. His legal costs are expected to be in the nine-figure range.
FTX, who filed for bankruptcy in January, has already spent a considerable amount on legal fees and consulting. According to Cointelegraph, the exchange has paid out a combined $34.18 million to law firms, investment banks and consulting companies in January alone. FTX’s chief restructuring officer and new CEO, John J. Ray III, also has a high salary, charging $1,300 an hour, amounting to a total of $305,000.
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