A new petition by Sam Bankman-Fried seeking reimbursement of his legal expenses has been met with fierce opposition from lawyers representing the cryptocurrency exchange and its committee of creditors.
As previously reported by Cointelegraph, Bankman-Fried’s attorneys filed a motion on March 15 to have his court costs covered by a directors and officers (D&O) insurance policy, and if approved by the judge, he would be placed in the highest queue for payment. In a March 29 objection filing, FTX’s attorneys objected to Bankman-Fried’s attempt to prioritize its own attorney’s fees at the expense of other potential claimants, stating:
"Allowing Mr. Bankman-Fried to expend D&O policy for his sole benefit is unfair, unfair and contrary to the interests of justice" Lawyers for FTX argued that if the court rules in Bankman-Fried's favor, the insurance payout should be available to other directors and officers who have claimed the funds. The official committee of unsecured creditors also dissented on the same day, noting that the D&O insurance policy only applies "where they have made an honest decision in the ordinary course of business," which it argued "is not the case" with Bankman-Fried's requirement.
The committee argued that the court should therefore deny the request and label Bankman-Fried "as the alleged perpetrator of one of the largest criminal frauds of the past decade." This view was also expressed by some in the crypto community prior to Sam Bankman Fried's request. Directors and officers (D&O) liability insurance is a type of insurance that protects individuals against personal losses if they are sued for being a director or officer of a company. Companies can also use such policies to cover legal fees and costs incurred as a result of litigation against former officers or directors.
However, the committee of creditors argued that Bankman-Fried failed to justify his claim for $10 million in available insurance that was supposed to cover FTX’s losses. The former FTX CEO is now reportedly using $10 million he previously gifted to his father, Joseph Bankman, to pay his legal fees after Bankman-Fried lent funds from Alameda Research.
Bankman-Fried was indicted on February 22 on 12 criminal counts, including multiple fraud charges, and was arrested on February 28 after being accused of using $40 million to attempt to bribe a Chinese official.
