- FTX has filed a lawsuit for $700 million against K5 Global.
- FTX accuses K5 Global of fraud, causing substantial financial harm to the exchange.
- The new FTX management has amassed assets worth $7 billion since filing for bankruptcy.
Bankrupt-cryptocurrency exchange FTX has sued K5 Global, an investment firm co-founded by Michael Kives, a former Hilary Clinton aide, and Bryan Baum. In accordance with a complaint submitted in the bankruptcy court in Wilmington, Delaware, FTX aims to recover a staggering $700 million in damages.
Sam Bankman-Fried, according to Reuters, was a ‘profligate patron’ who lavished cash on Bryan Baum, a co-founder of K5, Michael Kives, and his company K5 Global as part of an ongoing scheme to fraudulently use company assets for personal gain.
According to reports, FTX asserts that the investment firm K5 Global has engaged in fraudulent activities that have caused significant financial harm to the exchange. As a result, FTX and its users suffered a great loss, while Kives and Baum benefited from its downfall.
Elizabeth Ashford, a spokeswoman for K5, however, asserts that this lawsuit is without merit, stating:
“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,” spokeswoman Elizabeth Ashford said in an email, referring to Bankman-Fried by his initials.”
However, the details of their involvement are still unknown, and it is not yet known if they will face legal repercussions.
FTX’s new management, according to the report, has amassed more than $7 billion in assets since filing for bankruptcy, which they can use to reimburse customers whose funds were frozen when the exchange failed.
Another allegation is that a shell company controlled by Bankman-Fried spent $214 million on a minority stake in Kendall Jenner’s 818 Tequila brand from FTX funds. The assets of this tequila company, however, were much less valuable, per its SEC filings.
As word of the FTX lawsuit spreads, the crypto community have started to discuss the importance of regulatory oversight and investor protection.
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