Court denies former FTX head access to $10 million insurance policy
Court denies former FTX chief Sam Bankman-Fried access to $10 million insurance policy
Sam Bankman-Fried had hoped to pay his legal fees with a policy covering FTX executives' liability
A court denied access to a $10 million insurance policy for former FTX CEO Sam Bankman-Fried, who wanted to use it to cover legal fees, The Block reports. However, Judge John Dorsey said he could reapply after he met the conditions.
Bankman-Fried had hoped to use a D&O (Directors and Officers Liability Insurance) policy to cover his legal expenses. Such policies are purchased by companies to reimburse their executives for legal defense costs if sued for acts committed in the course of their official duties.
Bankman-Fried's attorneys argue that he is entitled to use such a policy to pay legal bills because all of the charges date back to when he was an FTX executive. In filing the motion, Bankman-Fried asked the court to lift the suspension of the policy, which automatically occurred after he resigned as head of the exchange.
Renewal of the policy would have allowed him to apply to the insurance companies for legal fees.
Judge Dorsey denied Bankman-Fried's motion, saying he had not explained why his request should be granted, nor had he cited any evidence. The former FTX chief could resubmit the motion later, providing the necessary arguments, the judge clarified.
"I do so without prejudice to the case. If Mr. Bankman-Fried wants to come back and have a hearing with evidence that explains the need to lift the automatic policy suspension, he can do so," Dorsey said
Bankman-Fried's legal costs could run into the millions of dollars, the publication writes. At the same time, the fortune of the former head of FTX, according to Forbes estimates, for the year decreased from $24 billion to $10 million.
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