Alameda Research Demands Return of $700M Paid to 'Super Networkers' for Celebrity and Political Access
Alameda Research, the hedge fund arm of the financially troubled FTX empire, is making efforts to recover $700 million that its founder, Sam Bankman-Fried, apparently utilized to establish connections with celebrities and politicians.
Because Bitcoin
June 23, 2023
CoinDesk reported that Lawyers representing FTX's new management claimed in a court filing on Thursday that the billions promised to "super networkers" Michael Kives and Bryan Baum demonstrate Bankman-Fried's disregard for proper procedures when spending money from companies he treated as a "slush fund."
According to the allegations, Kives, a former aide to Bill and Hillary Clinton, and Baum knowingly accepted money that personally benefited Bankman-Fried, without providing any corresponding benefit to Alameda. Their actions are described as having been carried out with dishonest intentions.
In the FTX filing, it was stated that Bankman-Fried, the founder, treated the corporate entities he controlled as a slush fund, showing little regard for proper corporate practices. This echoes previous criticisms of poor management at the exchange, which ultimately led to its bankruptcy filing in November.
During a gathering at Kives' residence in February 2022, where notable figures such as a former presidential candidate, actors, reality TV stars, musicians, and multiple billionaires were in attendance, Bankman-Fried seemed captivated by the event. Subsequently, within a few weeks, Bankman-Fried committed to investing billions in Kives' and Baum's companies, with limited information on the benefits FTX would receive in return, according to the filing.
The filed document revealed that the resulting term sheet was merely a superficial list of investment ideas, lacking any substantial due diligence. An internal note quoted in the filing indicated that Bankman-Fried suggested the possibility of endorsements with their friends, involvement in Democratic politics, or investments, but with an uncertain tone.
Furthermore, Bankman-Fried failed to clarify the nature of Baum's affiliation with FTX, leaving it ambiguous whether Baum was an employee or an external party. In an internal document, Bankman-Fried described the situation as "sorta complicated and liminal and unclear," while stating that Bryan resided in the "uncanny valley."
According to the filing, the transfers of $700 million from Bankman-Fried's companies to Kives' and Baum's entities exhibited characteristics of fraud under bankruptcy law. These transfers were concealed, inflated in value, and executed at a time when FTX was nearing insolvency, as outlined in the filing.
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