Bankrupt FTX Trading Ltd. is suing to recover $700 million that the failed crypto exchange paid venture capital firm K5 Global and its principals after they provided access to celebrities and politicians, Bloomberg News reported. K5 Global founder Michael Kives and managing member Bryan Baum allegedly profited by ingratiating themselves with former FTX Chief Executive Officer Sam Bankman-Fried, who transferred vast sums from FTX to K5 and related ventures without meaningful due diligence, according to FTX’s lawsuit, filed Thursday in Delaware bankruptcy court. Bankman-Fried “was captivated” by Kives after attending a February 2022 dinner party at his house alongside guests including former politicians and a “centibillionaire CEO.” Days later, Bankman-Fried attended a Super Bowl party that included well-known celebrities, the lawsuit said. In an internal note Bankman-Fried drafted shortly after the events, he said Kives and Baum were “something of a one-stop shop for relationships that we should utilize” and that in exchange, the pair wanted him and FTX to consider celebrity endorsements with their friends and “maybe us to invest in them or some stuff, idk.” Read more.
In related news, a group of media organizations on Friday appealed a court decision that allows collapsed crypto exchange FTX to keep customer names secret during its bankruptcy case, Reuters reported. U.S. Bankruptcy Judge John Dorsey in Wilmington, Delaware, ruled earlier this month that FTX did not have to reveal its customers' names because doing so could expose them to identity theft and other scams. Bankrupt companies are typically required to reveal the names of their creditors and the amounts of debt they hold, including those of individual customers, but U.S. bankruptcy law contains an exception for information that would create undue risk of identity theft or other injury. Bloomberg, Dow Jones & Company, the New York Times Company and the Financial Times appealed Dorsey's ruling. Their attorneys have argued that FTX is not entitled to a "novel and sweeping exception" to bankruptcy's typical disclosure requirements simply because its customers used cryptocurrency. Read more.
