The bankrupt estate of crypto exchange FTX filed a lawsuit on Thursday against investment firm K5 Global, seeking to claw back $700 million that Sam Bankman-Fried, the exchange’s now-disgraced founder, allegedly lavished on the firm from March to September 2022.
In addition to K5 Global, FTX’s estate sued Michael Kives and Bryan Baum, the firm’s cofounders. Kives was once an aide to President Bill Clinton after Clinton’s presidency ended, his bio notes. He then worked as a talent agent, eventually becoming a “super-networker,” according to the lawsuit.
Baum is a graduate of Swarthmore College, and, per his bio on K5 Global’s website, a “serial entrepreneur.” K5 Global was registered at his parents’ home in Florida, says the lawsuit.
Both Baum and Kives did not immediately respond to a request for comment. “K5 was under the impression—like many others—that SBF [Sam Bankman-Fried] was completely legitimate and they were entering into a fair, long-term, and mutually beneficial business relationship,” a spokesperson said in a statement to Fortune. “Our belief is that the lawsuit is without merit.”
The lawsuit against Kives and Baum is just one of a number of actions the bankrupt estate of FTX has launched to claw back the billions it owes creditors.
In February 2022, the cofounders of K5 Global first met with Bankman-Fried during a dinner party at Kives’s house, where guests included a “former presidential candidate, top actors and musicians, reality TV stars, and multiple billionaires,” the lawsuit read.
After joining Kives and “several A-list celebrities” at the 2022 Super Bowl, Bankman-Fried drafted an internal note two days later, writing that Kives was “probably, the most connected person I’ve ever met” and that he and Baum could provide “infinite connections.”
In exchange, Bankman-Fried noted that the founders of K5 Global wanted him and FTX to “consider endorsements with their friends,” “work with them on Democratic politics,” and maybe “invest in them or some stuff, idk,” the lawsuit alleged.
In less than three weeks, Bankman-Fried did “invest in them or some stuff,” signing what was, the suit claimed, a bare-bones term sheet with Kives and Baum, and wiring K5 Global $300 million a day later.
After the payment, Kives and Baum “worked to cultivate a close relationship with their new profligate patron,” the lawsuit read. Both advised Bankman-Fried on investment strategies and were included in FTX’s internal Slack channels. Bankman-Fried, their “profligate patron,” even had a room reserved for Baum within the luxury apartments the FTX founder had bought in the Bahamas, the suit alleged.
In May 2022, Bankman-Fried had Alameda Research, his crypto hedge fund, wire the cofounders’ investment firm another $200 million. And by the end of September, he added to their stash another $200 million, bringing the total amount of money K5 Global raked in from Bankman-Fried to $700 million.
And even as the FTX founder’s empire crumbled in November, Kives and Baum, the lawsuit alleges, “reached out to various billionaires, private equity firms, and financiers on Bankman-Fried’s behalf.”
