Sam Bankman-Fried, the former CEO of FTX, stated in a court document on Wednesday that he plans to use the cryptocurrency exchange’s director and officer liability insurance to pay for his legal expenses.
If the court grants Bankman-Fried’s motion, it will essentially position the former billionaire ahead of FTX’s creditors, a move that his company’s new management has so far opposed.
For suspected fraud at FTX, the cryptocurrency exchange he created, Bankman-Fried is facing a long list of criminal charges. The former millionaire is scheduled to stand trial in October and may be sentenced to life in prison if found guilty of all counts.
Experts say millions of dollars might be spent on Bankman-Fried’s legal defense.
In the FTX bankruptcy case, Bankman-Fried is requesting a court order that would enable him to access money from the organization’s director and officer insurance plan for “the reimbursement and payment of his defense fees.”
The executives of a firm are often covered by director and officer liability insurance in the event that they become the subject of legal action. FTX’s business insurance plans with Relm Insurance and Beazley Insurance are what Bankman-Fried is requesting access to.
In order for the insurance policy to “give priority of payment to individual insureds with an un-indemnified loss like Mr. Bankman-Fried,” Bankman-Fried urged FTX to accept this.
Sam Bankman-Fried has asked a judge to order FTX’s new leadership to comply with his request because they have not yet done so.