Bankrupt crypto alternate FTX filed a criticism with the court docket asking to retrieve $700 million from, Michael Kives, a excessive–profile networker approached by Sam Bankman-Fried, and an organization he co-owned, K5 International, in response to a June 22 court docket submitting.
FTX alleges that its founder Sam Bankman-Fried (SBF), pursued the deal to leverage Kives’ high-value community to bolster his political and social affect. Bankman-Fried resigned as FTX CEO in November 2022 and was changed by John J. Ray III.
SBF, Kives, and Baum’s relationship
FTX described Bankman-Fried as a “profligate patron” of Kives and his co-founder Bryan Baum.
Kives and Baum are co-founders of K5 International, an funding and incubation agency. Kives wields a number of highly effective connections has represented or labored with a number of public figures and energy brokers, together with Arnold Schwarzenegger, Katy Perry, Mikhail Gorbachev, Warren Buffett, and each Invoice and Hillary Clinton. K5 International holds stakes in SpaceX, Airbnb, 818 Tequila, and extra.
The lawsuit alleged that K5 and FTX entities had a “extremely unorthodox, deeply intertwined relationship” with Kives and Baum, who “commonly advis[ed]” Bankman-Fried on funding methods and have been included in inside FTX Slack Channels.
Moreover, Bankman-Fried described Kives as “most likely, probably the most related individual I’ve ever met,” and “a one-stop store” for political relationships and movie star partnerships that might be utilized, in response to the complaints.
Moreover, the submitting alleges that Bankman-Fried had attended social occasions hosted by Kives in 2022 with “a former Presidential candidate, high actors and musicians, actuality TV stars and a number of billionaires” in attendance.
Whereas FTX executives questioned if Baum was appearing in FTX’s greatest curiosity, Bankman-Fried allegedly acknowledged that the connection was “difficult and liminal and unclear.”
When FTX was getting ready to collapse, the lawsuit alleged Kives and Baum labored behind the scene, reaching out to numerous billionaires, personal fairness corporations, and financiers on Bankman-Fried’s behalf.
“When Bankman-Fried’s fraudulent scheme started to break down, Kives and Baum labored behind the scenes with Bankman-Fried on a technique to seek out somebody to bail out the FTX Group (and to guard their golden goose).”
$700 million
In accordance with the lawsuit, Bankman-Fried directed Alameda Analysis, an FTX-related cryptocurrency buying and selling agency, to switch a complete of $700 million to K5 International-related entities with out making any due diligence in regards to the supposed “investments.”
“Bankman-Fried directed Plaintiffs to make a collection of wire transfers totaling $700 million in furtherance of the K5 Transaction and Mount Olympus Transaction.”
These transactions have been allegedly disguised as originating from shell corporations named SGN Albany and Mount Olympus Capital.
“Plaintiff Alameda Ventures LLC had no possession stake in both of those entities, and Plaintiff Alameda Analysis Ltd. owned solely roughly 8% of SGN Albany LLC.”
FTX alleged that Bankman-Fried pursued the transactions to burnish his political and social affect and defraud FTX’s prospects. The deal handsomely rewarded Kives and Baum with $125 million, respectively.
“Bankman-Fried pursued the K5 Transaction and Mount Olympus Transaction to burnish his personal political and social affect. In pursuing these transactions, Bankman-Fried cavalierly agreed to make billion-dollar investments utilizing different folks’s cash, with no due diligence, and accepted phrases that personally enriched Defendants Kives and Baum by excessively overpaying every of them $125 million as a part of the K5 Transaction.”
Moreover, an Bankman-Fried-controlled agency made a $214 million funding to buy a minority stake in a celebrity-backed tequila model with property valued at $2.94 million, in response to its filings with the U.S. Securities and Trade Fee.