Sam Bankman-Fried's Lawyer Refutes Claims of Reckless Investments at FTX: Report

<p>Sam Bankman-Fried (SBF) is fighting to defend the
legitimacy of FTX's investments. His lawyer has argued that these investments
were not "reckless and frivolous," countering former Executive Nishad
Singh's portrayal of excessive spending on marketing and celebrity
endorsements, Reuters reported.</p><p>Singh, FTX's former Chief Technology Engineer,
testified for a second consecutive day in SBF's fraud trial at the Manhattan
federal court today (Wednesday). Under cross-examination, Singh stated that he
thought FTX could handle its challenges after discovering a shortfall of $13
billion in customer funds in September 2022. </p><p>Challenging the Testimony of FTX’s Former Top Executive</p><p>FTX declared <a href="https://www.financemagnates.com/terms/b/bankruptcy/">bankruptcy</a> on November 11, 2022, and
Singh had previously testified that the company's venture investments and
substantial marketing deals "reeked of excess and flashiness."
However, <a href="https://www.financemagnates.com/tag/sam-bankman-fried/" target="_blank" rel="follow">SBF</a>'s defense lawyer, Mark Cohen, raised the question of whether
promoting FTX's brand had business benefits, to which Singh acknowledged that
it had both benefits and costs.</p><p>In previous testimony, <a href="https://www.financemagnates.com/cryptocurrency/us-regulators-charge-ftxs-senior-executive-nishad-singh-with-fraud/" target="_blank" rel="follow">Singh</a> expressed concerns
about a deal with an investment firm called K5, which SBF had described as a
"one-stop shop" for celebrity relationships. However, Singh later
acknowledged that K5 facilitated SBF's investment in a tequila brand run by a
"famous celebrity."</p><p>The trial's latest developments hint at a complex
legal battle. FTX's current management had previously filed a lawsuit against
K5, seeking to recover $700 million. They claimed that a shell company
controlled by SBF had used $214 million in FTX's funds to buy a stake in
Kendall Jenner's 818 Tequila brand when its assets were valued at just $2.94
million. </p><p>FTX New Plan to Refund Customers’ Funds</p><p>Meanwhile, <a href="https://www.financemagnates.com/tag/ftx/" target="_blank" rel="follow">FTX</a> has revealed an amended proposal
aimed at returning a significant portion of creditors' holdings, potentially as
high as 90% of the funds that were held at the <a href="https://www.financemagnates.com/terms/e/exchange/">exchange</a> before its collapse.</p><p>FTX's debtors, currently overseeing the bankruptcy
process, intend to formally file this plan by December 16, 2023, with the
expectation that it will be reviewed by the US Bankruptcy Court.</p><p>The proposal, which was disclosed in the company's
official statement, is aimed at dividing the missing customer assets into three
pools. These categories are assets allocated to FTX.com's customers, the assets
intended for FTX.US customers, and a "General Pool" that encompasses
other assets.</p><p>The proposal specifies that customers with a
preference settlement amount under $250,000 can accept the settlement without
any reduction in their claim or payment. The preference settlement amount is
calculated as 15% of the customer withdrawals made on the exchange nine days
before its collapse.</p><p>Additionally, creditors will receive a shortfall claim against the general pool, which corresponds to the
estimated value of assets that were missing from their respective exchanges.
This shortfall claim is estimated to be approximately $9 billion for FTX.com
and $166 million for FTX.US, the US arm of the exchange.</p>

This article was written by Jared Kirui at www.financemagnates.com.