FTX, the collapsed cryptocurrency firm, has taken legal action against investment firms and individuals connected to its previous operations in an attempt to reclaim over $700 million.
The lawsuit was filed on June 22 in the United States Bankruptcy Court for the District of Delaware and includes 16 counts against the defendants.
Among the defendants named in the lawsuit are K5 Global, an incubator and investment company, as well as Mount Olympus Capital and SGN Albany Capital, along with their affiliated entities.
Michael Kives and Bryan Baum, co-owners of K5 Global, are also listed as defendants. Kives, a former talent agent and aide to Hilary Clinton, hosted a dinner party attended by FTX’s then-CEO, Sam Bankman-Fried (SBF), in 2022.
The lawsuit described the event as a gathering of prominent individuals, including celebrities, billionaires, and a former presidential candidate.
According to the lawsuit, FTX-affiliated crypto trading firm Alameda Research transferred $700 million to Kives, Baum, and K5 Global.
However, the transfers were disguised as transactions between shell companies SGN Albany and Mount Olympus Capital.
The lawsuit aims to recover the funds that were transferred from Alameda Research to SGN Albany Capital and subsequently from Kives, Baum, and SGN Albany Capital to Mount Olympus Capital.
The lawsuit alleges that these transfers were avoidable and lacked equivalent value. In bankruptcy law, an avoidable transaction can be reversed under relevant regulations.
The lawsuit also highlighted the close personal ties between Kives, Baum, and SBF, with Baum even having his own bedroom in FTX’s Bahamas residence.
After FTX’s collapse, the suit claims that Kives and Baum collaborated with Bankman-Fried on a strategy to secure a bailout for FTX Group and protect their own interests.
In response to the lawsuit, K5 Global issued a statement to Cointelegraph, dismissing the claims as meritless.
They emphasized that K5 is a venture capital firm with over $1 billion in assets under management and unrelated to any funds from Bankman-Fried and his affiliates.
The spokesperson stated that K5 believed they were engaging in a legitimate and mutually beneficial business relationship with Bankman-Fried and considered the lawsuit to be baseless.
The lawsuit includes nine counts related to fund transfers, with Kives and Baum individually charged with aiding and abetting breach of fiduciary duty and dishonest assistance. SGN Albany Capital is charged with unjust enrichment.
The legal proceedings will determine the validity of these claims and the potential recovery of the funds sought by FTX.
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