Bankman-Fried's Snitching Deal in $1.3M FTX Civil Lawsuit

In an ongoing civil lawsuit in the Southern District of Florida involving FTX promoters and insiders, a proposed settlement could provide relief to FTX co-founder Sam Bankman-Fried. The settlement requires Bankman-Fried's cooperation in providing information about FTX-related entities and his investments in Anthropic, while plaintiffs agree to dismiss claims against him. This cooperation would include details on venture capital firms, accountants, and attorneys connected to FTX, as well as documents on his Anthropic investments and an affidavit confirming his negative net worth.

Bankman-Fried's Cooperation Sought in $1.3 Million FTX Civil Lawsuit

New York, NY - April 20, 2024 - A proposed settlement in the ongoing civil lawsuit against FTX co-founder Sam Bankman-Fried and various celebrity promoters offers a glimmer of relief for the disgraced founder. Under the terms of the agreement, Bankman-Fried would provide extensive cooperation to plaintiffs' attorneys in exchange for the dismissal of existing and potential future claims against him.

The civil lawsuit, filed in the Southern District of Florida, consolidates multiple lawsuits against FTX promoters and insiders. Among the defendants are high-profile celebrities such as former NBA star Shaquille O'Neal, former NFL quarterback Tom Brady, and supermodel Gisele Bundchen. Plaintiffs allege that these celebrities openly promoted FTX, enticing countless individuals to invest in the now-defunct exchange.

To secure the settlement, Bankman-Fried must furnish plaintiffs with detailed information about FTX-related entities, venture capital firms invested in the exchange, and the accountants and attorneys involved in the company's operations. Additionally, he must provide nonprivileged documents outlining his investments in the AI company Anthropic and an affidavit confirming his negative net worth.

In return for Bankman-Fried's cooperation, plaintiffs have agreed to drop their claims against him. However, some acknowledge that this shift in focus could introduce uncertainty regarding the outcome of the case. The final decision on whether to approve the settlement rests with the presiding judge.

Meanwhile, Bankman-Fried continues to appeal his 25-year prison sentence for criminal charges related to FTX's collapse. The civil lawsuit is separate from the criminal case and represents a significant effort to hold Bankman-Fried accountable for his alleged role in the exchange's downfall.

Past Developments in the FTX Lawsuit

Prior to the proposed settlement, several FTX insiders and celebrity promoters sought similar agreements. Former FTX executives Gary Wang, Caroline Ellison, and Nishad Singh, along with former FTX lawyer Daniel Friedberg and NFL quarterback Trevor Lawrence, filed motions to settle their cases.

In April 2023, celebrity promoters Brady and Bundchen filed a motion to dismiss claims against them. This motion was merged with the consolidated case in June 2023.

Regulators Under Scrutiny

In a related development, US Senators Elizabeth Warren and Charles E. Grassley have requested information from the Commodity Futures Trading Commission (CFTC) regarding its communication with Bankman-Fried prior to FTX's collapse. The senators are investigating the CFTC's oversight of the cryptocurrency industry and its potential role in preventing such disasters in the future.

Conclusion

The proposed settlement in the FTX civil lawsuit represents a significant development in the aftermath of the exchange's collapse. While Bankman-Fried's cooperation could provide valuable insights into the events leading up to FTX's demise, it remains to be seen whether the settlement will fully absolve him of civil liability. The ongoing civil lawsuit and the senators' scrutiny of the CFTC highlight the ongoing efforts to hold accountable those responsible for the devastating losses suffered by FTX investors.