Cryptocurrency tycoon Sam Bankman-Fried is suing his insurer, CNA, for allegedly failing to pay legal fees related to his defense against fraud allegations.
According to the complaint filed by the former billionaire, CNA, also known as Continental Casualty Company, “unreasonably failed to timely pay Mr. Bankman-Fried’s claims as required.” According to his attorneys, the alleged violations “have caused, and may continue to cause, significant and irreparable harm for which there is no adequate legal remedy.” The document states that his CNA policy has a liability limit of $5 million and begins after the $10 million base policy is exhausted. The filing makes clear that the financial costs of litigation for Bankman-Fried have been increasing since FTX filed for bankruptcy in November 2022.
The founder of FT is on trial
Bankman-Fried himself is accused of numerous frauds to the detriment of his clients. His trial in a New York court began this week. On Wednesday, the parties made their opening statements.
In his opening statement, defense attorney Mark Cohen acknowledged that FTX loaned money to Alameda, but said Bankman-Fried – who graduated from the Massachusetts Institute of Technology with a degree in physics in 2014 – had a “reasonable belief” that the loans were authorized and secured through security.
“There was no theft,” Cohen said. “He didn’t deceive anyone himself. He himself had no intention of deceiving anyone. He himself acted in good faith.”
Cryptocurrency exchange collapsed
FTX filed for bankruptcy in November after CoinDesk reported that its sister trading firm, Alameda Research, held the exchange’s native FTT token as a significant portion of its portfolio. Rival exchange Binance then announced that it would sell all of its token holdings, leading customers to begin withdrawing their funds from FTX.
FTX founder and CEO Sam Bankman-Fried was arrested in the Bahamas the following month and extradited to the United States, where he was charged with eight counts of fraud.