Sign In with Google
Sign In with Facebook
The Lawsuit Filed by FTX
FTX has instigated a lawsuit against several investment entities that were linked to it prior to its downfall. The case was lodged in the United States Bankruptcy Court for the District of Delaware on June 22, containing 16 claims and seeking north of $700 million from the respondents.
The Named Defendants in the Lawsuit
Listed as defendants in the lawsuit are business incubator and investment firm K5 Global, Mount Olympus Capital, SGN Albany Capital, along with related entities, and co-owners of K5 Global, Michael Kives and Bryan Baum. Kives, known as a former representative for the CAA talent agency and a former aide to Hillary Clinton, was reported to have hosted a social event in 2022 attended by FTX's then-CEO, Sam Bankman-Fried (SBF):
“Kives, well-known for his ‘super-networking’ prowess, gathered a crowd at the dinner party which comprised a former Presidential candidate, leading actors and musicians, reality TV celebrities, and numerous billionaires.”
The Allegations and Claims in the Suit
The case alleges that, following this social gathering, crypto trading entity Alameda Research, affiliated with FTX, transferred $700 million to Kives, Baum, and K5 Global. These transactions were purportedly masked as originating from shell corporations SGN Albany and Mount Olympus Capital.
The lawsuit seeks the restitution of the funds that were shifted from Alameda Research and subsequently ended up in SGN Albany Capital, as well as funds transferred from Kives, Baum, and SGN Albany Capital to Mount Olympus Capital.
According to the lawsuit, these transfers were executed “without receiving equivalent value” and were, crucially, avoidable—a term in U.S. bankruptcy law referring to transactions that can be undone under the Bankruptcy Code or other legal provisions.
The lawsuit also noted the close personal relationships formed among Kives, Baum, and SBF, with Baum allegedly having a dedicated bedroom in the FTX executives' residence in the Bahamas. Following the collapse of FTX, it is alleged that “Kives and Baum conspired with Bankman-Fried covertly to seek out someone to rescue the FTX Group (and thus safeguard their cash cow).”
K5's Response to the Lawsuit
In a rebuttal to the lawsuit given to Cointelegraph, a representative for K5 Global dismissed the lawsuit as "baseless."
The spokesperson stated, "K5 is a venture capital firm overseeing more than $1 billion in assets (excluding any funds from SBF and associated parties) and has investments in 148 companies. In mid-2022, an affiliate of Sam Bankman-Fried and Alameda acquired a third of K5’s general partnership in exchange for cash and stock, resulting in a $400 million investment in certain funds managed by K5."
The representative further expressed that K5, like many others, had believed that their partnership with SBF was entirely legitimate and was set to be a mutually beneficial, long-term business relationship. They stressed that the lawsuit was devoid of merit.
Nine counts of the lawsuit are related to the transfer of funds. Kives and Baum were individually charged with aiding and abetting breach of fiduciary duty and fraudulent assistance, while SGN Albany Capital was accused of unjust enrichment.
