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Sam Bankman-Fried wants FTX to prioritize covering his legal bills

Exchanges • March 15, 2023, 12:54PM EDT | The Block

Quick Take

  • Sam Bankman-Fried wants to use an FTX insurance policy to cover his legal bills.
  • If the court grants his request, it could land the former billionaire a payout before FTX creditors receive any cash.

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Former FTX CEO Sam Bankman-Fried wants to use the crypto exchange’s director and officer liability insurance to pay his legal bills, his lawyers said in a court filing on Wednesday.

If the court approves Bankman-Fried’s request, it would effectively put the former billionaire at the front of the line for an FTX payout — ahead of the FTX creditors, a move that his company’s new leadership has so far resisted. 

Bankman-Fried is facing a litany of criminal charges for his alleged wrongdoing at FTX, the crypto exchange he founded. The former billionaire is awaiting an October trial and could spend the rest of his life in jail if he’s convicted on all charges. 

Experts have said Bankman-Fried’s legal defense could cost millions of dollars. 

Bankman-Fried seeks a court order in the FTX bankruptcy case that would allow him to access funds through the company’s director and officer insurance plan for “the reimbursement and payment of his defense costs.” 

Director and officer liability insurance typically protects the executives of a company in the event that they are the target of a lawsuit. Bankman-Fried wants to access corporate insurance policies FTX held with Relm Insurance and Beazley Insurance. 

Bankman-Fried asked FTX to agree that the insurance policy “provides priority of payment to individual insureds with un-indemnified loss like Mr. Bankman-Fried.” FTX’s new leadership has not agreed to Bankman-Fried’s request, prompting him to request a judge make them do so.  

Disclaimer: The former CEO and majority shareholder of The Block has disclosed a series of loans from former FTX and Alameda founder Sam Bankman-Fried.