Former "genius" and CEO of failed crypto exchange FTX, Samuel Bankman-Fried, is hoping to use FTX's 'Directors and Officers' insurance to pay for his legal defense. FTX debtors and unsecured creditors have informed the court that FTX's D&O insurance was written to exclude the protection of an executive for precisely the types of fraud Mr. Bankman-Fried is charged with. The folks who lost money in the FTX collapse clearly do not want to keep paying for the former CEO's imaginary expertise and want every penny back they can get.
"Thus, for every dollar extended by the insurance carrier to Mr. Bankman-Fried's defense costs, there is one less dollar to pay the WRS Debtors' covered Losses," the debtors declare.
The debtors emphasize that the insurance policy excludes claims arising from "violations of securities laws, violations of money laundering laws, and any willful or fraudulent acts or omissions." The lawyers explain that the D&O policy belongs to the debtors' estates, and therefore, the court should not grant Sam Bankman-Fried unrestricted access to it.
Instead, the debtors believe that the court should require SBF to adhere to the bankruptcy court's 2016 compensation rules. Although SBF argues that depleting the D&O policy would not harm the debtors' estate, the debtors and unsecured creditors strongly disagree, stating that this assertion is "flat wrong."
