SBF transferred $700 million to K5 businesses last year.

The transfer of money was the subject of nine of the charges in the lawsuit.

On Thursday, in an effort to recover $700 million in investments allegedly made with diverted FTX money, the bankrupt cryptocurrency exchange FTX sued K5 Global and associates.

According to a bankruptcy court lawsuit filed by FTX in Wilmington, Delaware, Sam Bankman-Fried (SBF), the company’s founder, was a “profligate patron” who lavishly gave money to Michael Kives, his company K5 Global, and K5 co-founder Bryan Baum to fraudulently use the business’s assets for personal gain.

Rescue Finance Before Bankruptcy

According to the complaint, SBF transferred $700 million to K5 businesses last year. And he used K5’s business connections to try to get rescue finance in the days before FTX declared bankruptcy in November 2022.

Moreover, according to the lawsuit, SBF ignored warnings from FTX workers. That K5 was trying to scam FTX and instead kept making investments to boost his own political and social standing. FTX claimed that Bankman-Fried approved expenditures in K5 projects. That benefitted Kives and Baum at the expense of FTX and its consumers.

The complaint alleges that a Bankman-Fried-controlled shell company invested $214 million of FTX money in Kendall Jenner’s 818 Tequila brand, a poor choice given that the assets of the tequila company were only valued at $2.94 million at the time of the investment.

A transaction is avoidable as per U.S. bankruptcy law. If it is subject to reversal under the Bankruptcy Code or other applicable statutes.

The transfer of money was the subject of nine of the charges in the lawsuit. Personal charges of assisting and abetting a violation of fiduciary responsibility and dishonest assistance were brought against both Kives and Buam, while SGN Albany Capital was charged with unlawful gain.

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Filed under: Bitcoin - @ June 23, 2023 10:10 am