FTX is suing Michael Kives, a former aide to Hilary Clinton, and also his investment firm, K5 Global. The bankrupt exchange is trying to get back a $700 million investment made with misappropriated funds. The suit also mentioned Bryan Baum who is a co-founder of K5, and affiliated entities. Kives is a well-connected Hollywood insider with ties to several A-list celebrities. He was a former advisor to Bill and Hillary Clinton.
K5 Global attracted a $300 million investment from FTX’s sibling business, Alameda Research. According to FTX, K5, and shell firms were used to transfer a total of $700 million to Kives and Baum with almost no due diligence. The creditors are trying to recover the full amount. FTX alleges that Kives and Baum helped Sam Bankman-Fried (SBF) violate his fiduciary obligations.
When did FTX send funds to K5?
According to the exchange, Bankman-Fried approved investments in K5 projects that benefited Kives and Baum at the expense of FTX and its clients. The first $300 million was allegedly sent following Bankman-Fried’s attendance at a dinner party at Kives’ residence. SBF was allegedly charmed by Kives’ illustrious connections.
In 2022, SBF allegedly approved the transfer of $700 million to K5 organizations. According to the lawsuit, SBF relied on K5’s connections to secure rescue finance prior to FTX’s bankruptcy in November 2022. K5 asserted that the lawsuit lacked validity. According to K5’s spokeswoman Elizabeth Ashford, the firm thought SBF was completely genuine. Moreover, she said that they thought they were entering a fair and mutually beneficial business relationship.
SBF has entered a not-guilty plea to charges that he used FTX customers’ money to support his own risky ventures while defrauding them. Since the bankruptcy, FTX’s new management has amassed more than $7 billion in assets that can be used to recoup the money that the clients lost when the crypto exchange declared bankruptcy.