- The former FTX CEO tried to use a $10 million insurance policy to pay for his legal fees.
- The firm is covered by policies from both Relm Insurance and Beazley Insurance.
For the time being, at least, Sam Bankman-Fried will not be able to use his FTX insurance to pay for his legal fees. The former FTX CEO tried to use a $10 million insurance policy to pay for his legal fees, but the bankruptcy judge refused his petition on Wednesday.
For the insurance company to evaluate Bankman-Fried’s claims and perhaps compensate his legal fees, he requested that the court remove a stay on FTX’s director and officer liability insurance coverage.
Can Resubmit Case With More Evidence
According to Judge John Dorsey, who denied Bankman-Fried’s request, the former crypto CEO has the opportunity to resubmit the case at a later date with more evidence if he so chooses.
Judge Dorsey stated during the hearing:
“I have no choice but to deny the motion for lack of evidence. I will do so without prejudice. If Mr. Bankman-Fried wants to come back and put on an evidentiary hearing that will establish the elements necessary for me to lift the automatic stay, he’s free to do so. But we’ll deal with that another day.”
The former crypto entrepreneur has been hit with both criminal and civil lawsuits from U.S. authorities for his alleged wrongdoings at FTX. His legal fees might well go into the millions, according to experts.
In the event that a company’s directors or officers are sued, director and officer liability insurance may provide financial protection. Although the FTX plan’s specifics are murky, several policies exclude fraudulent activity. The firm is covered by policies from both Relm Insurance and Beazley Insurance.
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