FTX has reportedly sued investment firm K5 Global and its co-founder Michael Kives.
The move is part of the bankrupt company’s efforts to recover assets that former FTX CEO Sam Bankman-Fried spent, Reuters reported Friday (June 23).
Bankman-Fried had invested $700 million with K5 Global entities in 2022 and then tried to leverage K5’s celebrity and business connections to obtain financing when FTX was headed toward bankruptcy in November 2022, according to the report.
Kives is a former aide to Hillary Clinton, has worked as a Hollywood agent and has been described by Bankman-Fried as “probably, the most connected person I’ve ever met,” the report said.
In the suit, the new leadership of FTX alleges that the investments were made with misappropriated funds, that Bankman-Fried used the company’s assets for his own personal gain and that the K5 projects in which he invested had no value to FTX, per the report.
Related: Latest FTX Filings Show Bankman-Fried Is Banking on Being Freed
K5 told Bloomberg the lawsuit was without merit.
“K5 was under the impression — like many others — that SBF [Sam Bankman-Fried] was completely legitimate, and that they were entering into a fair, long-term, and mutually beneficial business relationship,” a K5 spokesperson said, per the report.
This is the latest of the efforts of the new management of FTX to claw back funds from deals made before the firm’s bankruptcy.
In May, two of FTX’s businesses sued to recover $6.9 million from Embed Financial, alleging in a court filing that Bankman-Fried and members of his inner circle used misappropriated funds to pay Embed, a broker-dealer acquired by Bankman-Fried and that Embed was worth just a fraction of what the group paid for it.
The plaintiffs want to use bankruptcy laws to reclaim money paid to Embed’s shareholders, which include Bain Capital, Y Combinator and 9Yards.
In February, it was reported that FTX was negotiating the return of $400 million invested by Bankman-Fried in the Brazilian hedge fund Modulo Capital.
Ten days before that, FTX management began the legal process of recovering $93 million in political donations made by Bankman-Fried to 200 lawmakers.
