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Prosecutors urged a Manhattan federal court judge on Monday to deny a request by FTX founder Sam Bankman-Fried to dismiss criminal charges accusing him of stealing billions of dollars from customers to plug losses at his hedge fund, Reuters reported. Bankman-Fried, the 31-year-old former cryptocurrency billionaire, has pleaded not guilty to 13 counts of fraud, conspiracy, making illegal campaign contributions and foreign bribery. On May 8, Bankman-Fried urged U.S. District Judge Lewis Kaplan to dismiss most of the counts, saying prosecutors charged him in a "rush to judgment" following a broad crash in 2022 where several prominent crypto companies went bankrupt, including his own Alameda Research. In a filing late Monday, prosecutors described motions to dismiss the charges as "meritless", rebutting Bankman-Fried's argument that the indictment's allegations were insufficient and legally defective. "The Indictment sufficiently alleges that the defendant and his co-conspirators made false and misleading representations to lenders relating to Alameda's financial condition. No more specificity is required," prosecutors wrote. Judge Kaplan will hear oral arguments on June 15.

First Republic Bank made its name catering to wealthy clients across California and New York, reeling in many with unusually sweet mortgages that eventually doomed the firm, Bloomberg News reported. The system made its employees rich, too. The San Francisco-based bank — which regulators seized and sold to JPMorgan Chase & Co. early this month — was paying dozens of employees more than $10 million apiece annually in the heyday before its collapse, according to people with knowledge of the situation. Some racked up incentives for arranging home loans, amassing deposits and growing wealth-management portfolios. For at least one unnamed banker who wasn’t a top executive, the tally exceeded $35 million last year, the people said. That surpassed even what First Republic’s new boss, JPMorgan Chief Executive Officer Jamie Dimon, was awarded for his 17th year running the nation’s largest bank. Though the bank was widely known for offering generous rewards to staff, some potential rescuers were surprised by the compensation figures on display when the Federal Deposit Insurance Corp. granted access to the bank’s data room days before the agency’s emergency intervention on May 1. First Republic’s failure left the agency’s main insurance fund facing a multibillion-dollar hit. That shortfall will eventually be plugged by a special fee imposed on the banking industry. The company’s incentive system helped drive up compensation for employees to an average of $310,000 apiece last year, according to regulatory filings.

A bankruptcy judge is allowing current and former officials with the parent company of Silicon Valley Bank to tap into the $210 million in insurance coverage available through directors and officers liability policies to defend themselves against litigation that followed the collapse of the bank, the Insurance Journal reported. The unsecured creditors' committee for the SVB Financial Group bankruptcy had objected to the expense, saying any insurance money spent on defending the directors and officers would not be available for other potential litigation or any settlements or judgments. The committee argued that the directors and officers aren’t entitled to any of the insurance proceeds because their own mismanagement caused the collapse of the bank. But Judge Martin Glenn, chief bankruptcy judge for the Southern District of New York, said the insurance policies themselves state that the banks directors and officers get first dibs on any proceeds from the D&O policies. “Even if it is true that the directors and officers do have liability, that is precisely why such insurance exists,” Judge Glenn said in an opinion released on Monday. “The Committee cites no legal authority for the proposition that directors and officers need to be ‘blameless’ to access insurance that is specifically intended to cover their defense costs and liability in these situations.”

Bankrupt cryptocurrency exchange FTX is suing former chief executive Sam Bankman-Fried and others over the acquisition of stock trading platform Embed, looking to claw back hundreds of millions in funds to repay creditors and customers, WSJ Pro Bankruptcy reported. The lawsuit alleges former FTX executives did little due diligence before an “astronomical” $240 million was paid for a business now valued at no more than $1 million, the highest bid received in bankruptcy for the asset, according to the lawsuit filed Wednesday in the U.S. Bankruptcy Court in Wilmington, Del. “The result of the bidding process leaves no doubt” that the more than $240 million paid to acquire Embed “was wildly inflated,” the new FTX management team said in the lawsuit. The bidders in bankruptcy “figured out what FTX insiders didn’t bother to assess before the Embed acquisition, namely, that Embed’s vaunted software platform was essentially worthless.” In pursuing the Embed acquisition, “the FTX insiders prioritized speed above all else,” the suit said. At the time of the acquisition, Embed had a “minuscule” customer base and “serious bugs plaguing its software platform,” according to the lawsuit. The new FTX management also filed lawsuits against former Embed employees and shareholders.

When asked in a Senate hearing this week who was to blame for the demise of Silicon Valley Bank, the lender’s former chief executive, Greg Becker, had plenty of ideas, blaming regulators, the bank’s board and its own customers for bringing it down. Yesterday, senior officials from two of the bank’s main regulators, the Federal Reserve and the Federal Deposit Insurance Corporation, told members of the same Senate panel that some of the impressions Becker had left lawmakers with were false, the New York Times reported. The contradictory congressional testimony threatened to pose yet another problem for Becker, who is facing an investigation by federal criminal prosecutors into his handling of the failed California lender as well as a shareholder lawsuit accusing him and another senior leader of misleading investors about the bank’s health in the lead-up to its failure. James N. Kramer, a lawyer for Mr. Becker, said Mr. Becker stood by the statements he had made. The regulators’ statements were part of a hearing held by the Senate Banking Committee on how bank oversight should look in the future in light of the failures of three regional banks this spring. It came two days after Mr. Becker appeared alongside former senior leaders of Signature Bank, a New York lender that collapsed just after Silicon Valley Bank did and prompted the federal government to take drastic steps to prevent widespread panic in the banking system.

Failed cryptocurrency brokerage Voyager Digital Holdings Inc. won court approval to begin winding down its operations and start repaying customers a portion of their crypto that’s been held on its platform since last year, Bloomberg News reported. Judge Michael Wiles approved Voyager’s liquidation procedures Wednesday, about a month after Binance.US terminated an agreement to purchase the crypto platform and after a deal to sell itself to FTX last year fell apart. Voyager customers will get about 36% of what they’re owed but their recovery could increase if the firm succeeds in a pending dispute with FTX, according to court documents. Nobody is happy with the liquidation, Judge Wiles said, addressing Voyager customers who complained about his oversight of the case, the cost of the bankruptcy, the amount lawyers are being paid and the fact that users are getting only a percentage of their crypto back. But the wind-down is the path Voyager is taking because the firm doesn’t have enough to fully repay customers, Judge Wiles said. Options that could have resulted in a better recovery, namely selling the company to FTX or Binance, didn’t work out, he said. Voyager didn’t realize when it tried to sell itself to FTX that Sam Bankman-Fried’s firm would turn out “to be a gigantic fraud,” the judge said.

A lawyer for Celsius Network on Wednesday said the crypto lender hopes to conclude an auction for its assets within days and the current lead bidder is Fahrenheit LLC, a consortium that includes blockchain-based venture capital firm Arrington Capital, at a U.S. bankruptcy court hearing in Manhattan, Reuters reported. Celsius attorney Ross Kwasteniet told U.S. Bankruptcy Judge Martin Glenn the auction has taken longer than expected, but has been highly competitive. The current bids are "hundreds of millions of dollars" higher than the initial bid by NovaWulf LLC, a digital asset investment firm, he said. New Jersey-based Celsius filed for chapter 11 protection in July, one of several crypto lenders to go bankrupt following the rapid growth of the industry during the COVID pandemic. Celsius said at the time it had more than 1.7 million registered users and approximately 300,000 active users with account balances greater than $100.