FTX reaches settlement with investment firm K5 Global, co-founded by former Hillary Clinton aide, as bankrupt crypto firm readies repayments
Bankrupt cryptocurrency exchange FTX said it has reached a settlement with venture capital firm K5 Global, co-founded by a former Hillary Clinton aide, following FTX’s lawsuit in June of last year.
The crypto firm said at the time it was seeking to recover $700 million (£565m) in investments it said were made by former FTX chief executive Sam Bankman-Fried with misappropriated funds.
John Ray, the FTX chief executive who has been leading recovery efforts, said called the settlement a “mutually beneficial solution”.
He said K5 was a “bright spot in the FTX portfolio” that would be a “key driver in the recovery efforts for our stakeholders”.
Repayment plan
The exchange collapsed in November 2022, leaving many customers unable to access their funds.
A court in October approved the firm’s plan to start repaying customers, a process it said is expected to begin in March.
K5 was co-founded by Michael Kives, who worked as an aide to Clinton’s chief of staff Huma Abedin, and angel investor Bryan Baum.
The firm was one of a number of companies that received lavish expenditure from Bankman-Fried, according to court testimony.
The former FTX chief used K5’s celebrity and business connections to try and obtain rescue financing before the firm’s bankruptcy, according to the lawsuit.
Former FTX engineering director Nishad Singh in October 2023 testified that Bankman-Fried had splashed out huge sums on everything from real estate and venture investments, to campaign donations and celebrity endorsements.
Lavish spending
FTX’s 2021 investments included $1bn to Genesis for a mining company, $499m to startup Anthropic and $200m to K5, Singh testified, adding that Bankman-Fried had attended a K5 dinner alongside Hillary Clinton, Katy Perry, Orlando Bloom, Leonardo DiCaprio, and Kris and Kylie Jenner.
A spreadsheet of FTX’s celebrity sponsorship deals given to the jury at the time included $205m for FTX Arena in Miami, $150m to Major League Baseball, $28.5m to Stephen Curry, $50m to Tom Brady and Giselle Bundchen and $10m to Larry David, amounting to a total of $1.13bn.
Bankman-Fried was sentenced last March to 25 years in prison.