TechFlow news — FTX has filed a lawsuit with the U.S. Bankruptcy Court in Delaware, targeting several investment firms associated with it prior to its collapse. The complaint, filed on June 22, includes 16 claims and seeks over $700 million in damages from the defendants.
The lawsuit names K5 Global, Mount Olympus Capital, SGN Albany Capital, affiliated entities of these firms, and Michael Kives and Bryan Baum—co-owners of K5 Global—as defendants. According to the filing, shortly before FTX’s collapse, its affiliate Alameda Research transferred $700 million to Kives, Baum, and K5 Global, but the parties disguised these transactions as originating from shell companies SGN Albany and Mount Olympus Capital.
The suit demands the return of funds transferred from Alameda Research to SGN Albany Capital, as well as funds moved from Kives, Baum, and SGN Albany Capital to Mount Olympus Capital. These transfers are described as having occurred "without receiving equivalent value in return" and, crucially, are considered avoidable. Under U.S. bankruptcy law, avoidable transactions refer to those that may be voided under bankruptcy statutes or other applicable laws.
The complaint alleges that Kives, Baum, and SBF cultivated close personal relationships, with Baum even maintaining his own bedroom at an FTX executive residence in the Bahamas. After FTX collapsed, "Kives and Baum worked behind the scenes with SBF to devise a strategy aimed at finding someone to rescue the FTX group (and protect their golden goose)."
A spokesperson for K5 Global responded, calling the lawsuit "without legal merit." The firm manages over $1 billion in assets and has invested in 148 companies. The spokesperson added: "In mid-2022, SBF and a subsidiary of Alameda acquired a one-third stake in K5's general partnership through a combination of cash and stock, and ultimately invested $400 million into certain funds managed by K5."
