Key takeaways:
- Insolvent cryptocurrency exchange FTX filed a lawsuit with the court for $700 million from Michael Kives.
- Kives was a former Hilary Clinton adviser and a former agent for the CAA entertainment agency.
Insolvent cryptocurrency exchange FTX filed a lawsuit with the court for $700 million from Michael Kives, a well-known networker approached by Sam Bankman-Fried, and a business he co-owned, K5 Global.
In the United States Bankruptcy Court for the District of Delaware, FTX has launched a lawsuit against some of the investment companies it had connections to before its demise. The lawsuit, filed on June 22, has 16 counts and demands that the defendants pay nearly $700 million.
In the complaint, the co-owners of K5 Global, Michael Kives and Bryan Baum, as well as affiliated businesses, Mount Olympus Capital, SGN Albany Capital, and other incubation and investment firms, are named as defendants. Kives was a former Hilary Clinton adviser and a former agent for the CAA entertainment agency. Sam Bankman-Fried, FTX’s former CEO, was cited in the lawsuit as having gone to a social gathering thrown by Kives in 2022:
“True to Kives’s reputation as a high-profile ‘super-networker,’ the attendees at the dinner party included a former Presidential candidate, top actors and musicians, reality TV stars and multiple billionaires.”
The lawsuit claimed that Alameda Research, a cryptocurrency trading company connected to FTX, then sent $700 million to Kives, Baum, and K5 Global while faking the origin of the transactions to be SGN Albany and Mount Olympus Capital.
In the lawsuit, money that was transferred from Alameda Research and ended up in SGN Albany Capital as well as money that was transferred from Kives, Baum, and SGN Albany Capital to Mount Olympus Capital are being demanded to be returned.
The moves were characterized as being made without receiving anything in exchange and, most importantly, as being preventable. An avoidable transaction can be undone per the Bankruptcy Code or other statutes, according to U.S. bankruptcy law.
According to the lawsuit, Kives, Baum, and SBF also formed close personal bonds. Baum even had his bedroom at the FTX executives’ Bahamas home. Kives and Baum collaborated behind the scenes with Bankman-Fried to develop a plan after FTX failed to locate a bailout partner for the FTX Group.
Nine of the counts in the suit concerned fund transfers. Kives and Buam were personally charged with aiding and abetting breach of fiduciary duty and dishonest assistance, and SGN Albany Capital was charged with unjust enrichment.
