Sam Bankman Fried’s new petition to recover legal fees has been met with strong objections from lawyers representing crypto exchanges and creditors’ committees.
As per a previous report by Cointelegraph, Bankman-Fried’s lawyers have filed a motion on March 15 seeking to have the court costs covered by the directors and officers (D&O) insurance policy, which if approved by the judge will see them placed on top. queue to pay.
Defense costs are guaranteed in most policies (after deduction) but the insurance has a provision for the choice of counsel so that even if the insurer is approved it is unlikely to agree to the high price SBF lawyers have (or needs).
— Mr Purple (@MrPurple_DJ) March 16, 2023
In a March 29 objection filing, FTX attorneys objected to Bankman-Fried’s attempt to prioritize their own legal fees at the expense of other potential plaintiffs, stating:
“It would be unfair, unjust, and contrary to the interests of justice to allow Mr. Bankman-Fried to channel D & O Policy for his sole benefit”
FTX’s attorneys argued that if the court gave Bankman-Fried a preference, then the insurance payout should apply to directors and other officers who have a claim to the fund.
The Official Committee of Unsecured Creditors also filed an objection the same day, stating that D&O insurance policies only apply “where they make honest decisionsin the ordinary course of business,” which they said was “not the case” regarding Bankman-Fried’s. request.
The committee argued that the court should reject the request, labeling Bankman-Fried as “allegedly one of the largest criminal frauds of the last decade.”
This sentiment has been voiced by some in the crypto community prior to Sam Bankman Fried’s request.
Directors and officers liability insurance (D&O) is a type of insurance coverage that protects individuals against personal loss if they are sued for being a director or officer of a company. The policy can also be used by the company to cover legal fees and expenses incurred as a result of a lawsuit against a former officer or director.
But the creditors’ committee asserted that Bankman-Fried failed to justify its claim of $10 million in coverage, which it had to cover FTX’s losses.
related: SBF is prohibited from using online messengers under the new guarantee agreement
According to reports, the former CEO of FTX is now paying legal fees with $10 million previously given to his father Joseph Bankman, after Bankman-Fried borrowed funds from Alameda Research.
Bankman-Fried was charged with 12 crimes on February 22, which included many fraud charges, and rounded up to twelve bakers on February 28 after allegations that he used $40 million to bribe Chinese officials.
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