Reorganizing Team to Pursue Improper Investment by FTX, Suing K5 Global for Seven Billion Dollars in Damages

FTX's bankruptcy restructuring team has launched another round of actions, suing investment companies that had previous dealings with FTX in the Delaware bankruptcy court in the United States, seeking compensation of over $700 million.

FTX Reorganizes Team and Seeks $700 Million in Damages

According to a lawsuit filed on June 22nd, FTX has brought forward up to 16 charges and is seeking over $700 million in damages. The defendants listed in the lawsuit include incubators and investment companies such as:

• K5 Global

• SGN Albany Capital

• Mount Olympus Capital

• Michael Kives, co-owner of K5 Global and former assistant to Hillary Clinton, and Bryan Baum

The reorganized team pointed out that Sam Bankman-Fried (SBF), founder of FTX, authorized the transfer of $700 million to K5-related entities in 2022 through Alameda Research, a trading institution under SBF. These investments were not directly recorded under the defendants' names, as they were conducted through the defendants' shell companies, SGN Albany Capital and Mount Olympus Capital.

The complaint also mentioned that SBF had purchased a minority stake in a defendant's tequila brand for $214.5 million through his shell company, even though the company was valued at only $2.94 million. The reorganized team stated:

Michael Kives and Bryan Baum effortlessly received $300 million. Both regularly provided other investment strategy advice to SBF and were included in the FTX Slack group. In the luxury mansion purchased by SBF in the Bahamas, there was even a room reserved for Bryan Baum.

SBF's Political and Business Strategies

These investments were executed after a social event hosted by Michael Kives, former assistant to Hillary Clinton, in 2022. Attendees included former presidential candidates, top celebrities, and many billionaires. In the days leading up to FTX's bankruptcy last year, SBF attempted to leverage these connections to secure emergency financing.

SBF described Michael Kives and his experience at the event that day as follows:

This may be the most well-connected person I've ever met. We should make good use of Kives and Baum's political and business relationships. They can provide various potential collaborations with celebrities and political connections. We can cooperate in politics and elections, and more importantly, maybe we can invest in some of their things.

As of now, SBF's guilt remains to be determined until the formal trial in October. His lawyer had previously denied charges of fraud, conspiracy, violating campaign finance laws, and bribery in China. Meanwhile, creditors are also hoping for a potential restart of FTX, but there is still considerable uncertainty.

Latest Update on FTX: Expected to launch a creditor claims website on 7/3 and release a reorganization plan in July