FTX Seeks Return of $700M Paid for Access to Celebrities and Politicians

Bankrupt crypto exchange FTX is trying to claw back over $700 million that former CEO Sam Bankman-Fried (SBF) paid to “super networkers” for access to politicians, court documents filed on Thursday show.

FTX’s attorneys alleged in their filing that SBF ordered Alameda Research to transfer around $700 million to “super networkers” Bryan Baum and Michael Kives — who was a former aid to both Bill and Hillary Clinton — through their company K5 Global. The lawsuit seeks the return of these funds as they were paid “without receiving equivalent value” and could be considered avoidable transactions, which in bankruptcy law means they could be reversed. FTX’s complaint reads:

“Bankman-Fried, Kives and Baum knew that these transactions were anything but typical arm’s-length investments, and that Bankman-Fried treated the legal entities that he controlled as a slush fund operated with a near-total disregard for corporate formalities.”

According to the document, SBF attended a party at Kives’ house in February 2022 where he was able to meet guests that included “a former Presidential candidate, top actors and musicians, reality TV stars and multiple billionaires”. Two days later SBF wrote an internal note saying that Kives was “the most connected person I’ve ever met”, and that he was a “one-stop shop for relationships that we should utilize”.

Within weeks, SBF had signed a document agreeing to invest billions in Kives’ and Baum’s companies without specifying what FTX would gain in return, with the filing noting that “the Term Sheet was little more than a cursory list of investment ideas”. The $700 million that were paid to Kives’ and Baum’s companies could be considered fraud under bankruptcy law, as they were concealed, had inflated value, and were made right before FTX became insolvent.

A spokesperson for K5 — which is co-owned by Kives and Baum — told Reuters that at the time the company, like many others, thought that “SBF was completely legitimate and they were entering into a fair, long-term, and mutually beneficial business relationship”. With that in mind, K5 believed that “the lawsuit is without merit”.