- FTX settlements with K5 Global, securing $700M in assets to help creditors repay.
- The exchange’s legal fights continue, including attempts to collect assets from former associates.
FTX settled a lawsuit that sought to recover $700 million in disputed investments from K5 Global. In June 2023, FTX filed a case against K5 in the United States after it had collapsed in November 2022 and was looking to recover some of its assets.
This deal would allow FTX to retain the percentage of the investment funds raised by K5. FTX CEO John J. Ray III stated that K5 is like a gem in the company’s portfolio and as much yield as possible, assets would bring toward paying back creditors. This is only one aspect of FTX’s broader recovery efforts.
Legal Battles of FTX
K5 Global, which was founded by Michael Kives and Bryan Baum, enjoyed strong ties to FTX founder Sam Bankman-Fried. The ex-aide to Hillary Clinton’s chief of staff, Kives also drew on influential business and celebrity connections, according to reports. Before the exchange went down, he was said to have laundered some of the stolen FTX money into K5’s investments.
In October 2023, a court-sanctioned FTX’s proposal to pay creditors back. Since then, the exchange has harvested gains from increasing prices of crypto and asset sales it’s holding in AI Startup Anthropic. The K5 settlement fits with these efforts to get creditors maximum recoveries.
FTX has also settled with LayerZero and other entities. The LayerZero agreement came after an $86 million lawsuit related to transactions with Alameda Research. The exchange also attempted to recover $67 million from Anthony Scaramucci and $70 million from former Alameda co-CEO Sam Trabucco.
In March 2024, Bankman-Fried was sentenced to 25 years in prison for fraud. Problems he has regarding the legal world still hover above the head of the cloud of uncertainty around the restructuring process at FTX. However, FTX has provisions of $6.5 billion for creditors and has agreed with Backpack on selling FTX EU, thus covering claims for creditors within that region.
The K5 settlement is making FTX move closer to restoring its financial status and recovering funds for investors, thus proving FTX’s willingness to recover all lost assets.
