After declaring bankruptcy, exchange FTX filed a lawsuit against venture capital firm K5 Global seeking to recover $700 million in investment.
According to Bloomberg, the two founders of K5 Global investment firm Michael Kives and Bryan Baum are accused of profiting by befriending former FTX CEO Sam Bankman-Fried.
Sam Bankman-Fried describes Michael Kives as the most connected person he has ever met and sees Kives as someone who will help him forge political connections and celebrity partnerships.
FTX said the former FTX CEO was a “profligate patron”. Bankman-Fried signed an agreement to “pour” billions of dollars into K5 Global and pay Kives and Baum $125 million each. FTX employees were concerned that K5 was trying to make money or scam FTX, but Bankman-Fried continued to invest in order to increase its political and social influence
In 2022, cryptocurrency exchange FTX and investment fund Alameda Research founded by Bankman-Fried transferred $700 million to K5 Global, Kives, and Baum affiliates. Before going bankrupt in November 2022, FTX tried to rely on K5’s celebrity and business connections for financial support .
According to a complaint filed by FTX, a shell company controlled by Bankman-Fried used $214 million from FTX to buy a minority stake in model Kendall Jenner’s 818 Tequila brand, at the time of the financial statement. The tequila company’s assets are valued at just $2.94 million.
Bankman-Fried has denied allegations of defrauding FTX customers by using their funds to support its own risky investments.
Since filing for bankruptcy, FTX’s new management has recovered more than $7 billion in assets. This money can be used to repay customers whose funds were frozen when the FTX exchange collapsed.
FTX has also filed a lawsuit against securities platform Embed and its payments to Genesis Global Capital, the bankrupt lending arm of cryptocurrency firm Genesis. FTX also announced an agreement with the Metropolitan Museum of Art (USA), in which the museum agreed to return the $550,000 in donations it received from the company by 2022