Sam Bankman-Fried can’t reimburse his legal bills with FTX insurance — for now, at least.
A bankruptcy court judge denied the former FTX CEO’s motion to access a $10 million insurance policy to fund his legal bill during a hearing on Wednesday.
Bankman-Fried had asked the judge to lift a stay on FTX’s director and officer liability insurance policy, which would have allowed the company’s insurance providers to assess his claims and possibly reimburse his legal costs.
Bankman-Fried did not provide evidence or establish cause, Judge John Dorsey said in denying the motion, adding that the former crypto boss has the option to come back with evidence at a later time.
“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,” Dorsey said during a hearing in the U.S. Bankruptcy Court for the District of Delaware.
The former crypto mogul pleaded not guilty to criminal charges stemming from his alleged misdeeds at FTX and is facing separate civil cases from U.S. regulators. Experts estimate his legal bills could cost millions of dollars.
Lawyers for FTX noted that other current and former employees of the crypto exchange are also eligible to use the insurance, and said that it would be unfair for Bankman-Fried to have special access to the policy. A Bankman-Fried spokesperson did not comment.
Companies often have director and officer liability insurance to protect executives in the event they are targeted by legal action. Some plans have exclusions related to fraud, although the details of the FTX plan are not clear. The company holds insurance policies with Relm Insurance and Beazley Insurance.
"At Relm, we value the trust and confidentiality of our clients, and refrain from commenting on specific insureds or situations. However, we’d like to emphasize our steadfast commitment to building resilience in the digital asset ecosystem, which includes evaluating and paying legitimate, covered claims in accordance with the terms of our policies,” Relm Insurance CEO and co-founder Joe Ziolkowski said in a statement to The Block before the hearing on Wednesday.
Beazley Insurance did not respond to a request for comment.
Disclaimer: The former CEO and majority shareholder of The Block has disclosed a series of loans from former FTX and Alameda founder Sam Bankman-Fried.
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