Lawyers for the crypto exchange and its creditors’ committee have strongly opposed Sam Bankman-current Fried’s plea to have his legal bills refunded.
According to previous Cointelegraph reporting, Bankman-lawyers Fried’s filed a motion on March 15 to have his court fees covered by directors and officers (D&O) insurance coverage, which if approved by the judge would place him at the top of the payout queue.
FTX’s lawyers opposed to Bankman-attempt Fried’s to prioritize his own legal fees at the expense of other possible claimants in a March 29 objection filing, stating: “To allow Mr. Bankman-Fried to drain the D&O Policies for his personal profit would be unfair, inequitable, and contrary to the interests of justice.”
If the court determines in favor of Bankman-Fried, FTX’s lawyers believe that the insurance reimbursement should be extended to other directors and officials who have a claim to the assets.
On the same day, the Official Committee of Unsecured Creditors filed an objection, noting that D&O insurance policies only apply “when they make honest judgments in the usual course of business,” which it contends “is not the case” in the instance of Bankman-request. Fried’s
According to the committee, the court should deny the request because Bankman-Fried is the “alleged perpetrator of one of the greatest criminal scams in the recent decade.” Prior to Sam Bankman Fried’s plea, some in the crypto community expressed similar sentiments.
Directors and officers (D&O) liability insurance protects individuals from personal losses if they are sued as a result of serving as a director or officer for a company. The firm can also use such plans to pay legal fees and costs incurred as a result of a lawsuit filed against a former officer or director.
The creditors committee, on the other hand, contended that Bankman-Fried had failed to support his claim to the $10 million in available coverage, which should instead be used to compensate FTX for its losses. According to rumors, the former FTX CEO is paying his legal bills with $10 million he previously donated to his father, Joseph Bankman, after Alameda Research loaned the monies to Bankman-Fried.
Bankman-Fried was charged with 12 criminal offenses on February 22, including various fraud accusations, and was reduced to a baker’s dozen on February 28 after allegations that he spent $40 million to bribe a Chinese official.