Recent news from Bloomberg reveals that a consortium of investors and clients of the cryptocurrency exchange FTX have decided to withdraw their allegations against co-founder Sam Bankman-Fried.
In return, Bankman-Fried has pledged to assist the plaintiffs in their ongoing legal battles against other parties implicated in the FTX collapse.
Settlement Between Bankman-Fried and FTX Insiders
According to the report, this agreement, if sanctioned by a judge, would absolve Bankman-Fried of civil liability just a few weeks after he received a 25-year prison sentence for fraud. The charges stemmed from accusations of embezzling billions of dollars from FTX.
The settlement, lodged in a Miami federal court, states that the plaintiffs in the multi-district litigation will settle all present and future claims against Bankman-Fried.
Other insiders at FTX, including ex-executives Gary Wang, Caroline Ellison, and Nishad Singh, who testified against Bankman-Fried, were also sued by investors. However, they have agreed to a settlement and have begun to supply information to bolster the plaintiff’s case, as per the court filing.
Interestingly, this leaves the high-profile celebrities, sports stars, and social media influencers who endorsed FTX to investors and customers as the remaining defendants.
As part of the settlement terms, Bankman-Fried has pledged to aid the plaintiffs’ attorneys in their pursuit of the remaining FTX endorsers. He will also supply all nonprivileged documents related to his assets and his investment in the artificial intelligence start-up Anthropic.
Bankman-Fried will also provide an affidavit confirming his net worth as negative and share documents about other defendants involved in the extensive civil litigation.
The roster of defendants in the combined FTX lawsuits is lengthy, with financiers and celebrity endorsers such as Tom Brady, Shaquille O’Neal, and Gisele Bundchen accused of promoting “unregistered securities” and enticing investors into a Ponzi scheme.
Bankman-Fried’s agreement includes the provision of any pertinent information about venture capital firms that invested in FTX and accountants and lawyers who collaborated with the exchange.
If successful, the plaintiffs could potentially secure significant damages. Court filings suggest that the settlements with the promoters involved in the agreement are estimated to be worth around $1.3 million.
Update on the FTX Scandal
Mark Botnick, Bankman-Fried’s spokesperson, stated that his client is committed to rectifying the situation. Botnick highlighted that since the FTX collapse, Bankman-Fried has concentrated solely on returning the estate’s assets to customers and ensuring they are compensated at current prices.
Botnick conveyed Bankman-Fried’s dedication to continue collaborating with Adam Moskowitz and his team, who represent the plaintiffs, to accomplish this objective.
In their petition for the judge’s approval of the settlement, the plaintiffs’ attorneys recognized the uncertainty and litigation risks associated with pursuing Bankman-Fried. They concluded that Bankman-Fried’s cooperation would be “valuable” in the remaining legal proceedings.
Bankman-Fried, who was found guilty at trial late last year and sentenced in late March, is currently detained at the Metropolitan Detention Center in Brooklyn, New York, before being transferred to the prison where he will serve his term. He plans to appeal both his sentence and conviction.”
