Alameda wants back $700M paid to ‘super networkers’ for access to celebrities and politicians.
Alameda Research, the hedge fund branch of the bankrupt FTX empire, is seeking the return of $700 million that founder Sam Bankman-Fried appears to have used to gain access to celebrities and politicians.
Lawyers for FTX’s new management said in a court filing on Thursday that the billions promised to “super networkers” Michael Kives and Bryan Baum showed Bankman-Fried’s disregard for formalities in spending money from companies he treated as a “slush fund.”
The allegations read that Kives – a former aide to both Bill and Hillary Clinton – and Baum “acted with dishonest minds” by accepting money, which personally benefited Bankman-Fried without providing Alameda with any equivalent payoff.
“Bankman-Fried treated the legal entities that he controlled as a slush fund operated with a near-total disregard for corporate formalities,” the filing by FTX added, echoing previous criticisms of poor management at the exchange, which filed for bankruptcy in November.
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According to the filing, Bankman-Fried appeared starstruck by a February 2022 party at Kives’ house where fellow guests included a former Presidential candidate, actors, reality TV stars, musicians, and multiple billionaires. Within weeks, Bankman-Fried had signed a document promising to invest billions in Kives’ and Baum’s companies, with little details on what FTX would gain in return.
The filing added that Bankman-Fried failed to clarify whether Baum was an employee of FTX or a third party, saying in an internal document that “it’s sorta complicated and liminal and unclear. Bryan lives in the uncanny valley.”
Transfers of $700 million made from Bankman-Fried’s companies to Kives’ and Baum’s had the badges of fraud under bankruptcy law, being concealed, having inflated value, and being made when FTX was about to become insolvent, the filing said.
K5 Global, the company founded by Kives and Baum, did not immediately respond to a request for comment from blockchain.
In an emailed statement provided to Reuters, a spokesperson for K5 said that it “was under the impression – like many others – that [Sam Bankman-Fried] was completely legitimate, and that they were entering into a fair, long-term, and mutually beneficial business relationship.”
Amitoj Singh contributed reporting.
UPDATE (June 23, 08:56 UTC): adds K5 statement to Reuters in last paragraph.
Edited by Sandali Handagama.