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FTX founder Sam Bankman-Fried is suing US insurance company CNA, saying it failed to pay out policies it took out to cover legal costs after a $10 million policy offered by London’s Beazley and Australia’s QBE was exceeded.
As the New York trial begins this week, Bankman-Fried has filed legal action against a unit of Chicago-based CNA, saying the company failed to pay directors and officers insurance designed to cover defense costs.
According to legal documents, a $5 million policy offered by Beazley and another of the same amount offered by QBE ran out after the insurance company agreed to pay. Bankman-Fried’s attorneys argued that should have triggered the so-called excess policy offered by CNA.
It remains unclear how Bankman-Fried will pay for his multimillion-dollar defense after the former cryptocurrency billionaire claimed nearly all of his wealth was wiped out by the FTX collapse.
Bankman-Fried had attempted to obtain more than $400 million worth of Robinhood stock owned by one of his companies, claiming through his attorney that he “needs some of the funds to pay for his criminal defense.” His argument was unsuccessful and the shares were seized by the U.S. Department of Justice and sold back to U.S. brokerage firms in September.
The new management overseeing bankrupt FTX claimed in a lawsuit last month that Bankman-Fried gave away money from Bankman-Free to his parents, Joe and Barbara Fried. A $10 million cash gift from trading company Alameda. Representatives for Bankman and Fried said the lawsuit’s allegations are “completely false.” FTX claims the money was used for Bankman-Fried’s criminal defense.
The two law professors had previously pledged that their California home would help secure their son’s bail. A spokesman for Bankman-Fried declined to comment.
The complaint alleges that despite Bankman-Fried’s “repeated requests,” CNA “unreasonably failed to promptly pay” his claim.
These alleged policy violations “have caused or are likely to cause serious and irreparable harm” to Bankman-Fried, including “impairing Mr. Bankman-Fried’s rights with respect to the numerous criminal and civil claims brought against him.” Ability to defend.”
The legal complaint asks CNA to pay for his defense and says it also caused substantial monetary losses of more than $75,000.
CNA and Beazley declined to comment. QBE did not immediately respond to a request for comment.
Insurers have been wary of accepting cryptocurrency companies and founders as clients given the risks posed by the industry, but brokers say D&O policies are one of the industry’s biggest areas of exposure to cryptocurrencies.
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