Embattled cryptocurrency executive Sam Bankman-Fried, defending himself against criminal charges in New York, now is on the offense in California in a lawsuit over unpaid directors and officers claims.
Bankman-Fried filed the lawsuit in the Northern District of California against Continental Casualty Co., which had the second layer of excess coverage for him related to Paper Bird Inc. and other Bankman-Fried companies, the lawsuit said. The policy provided a $5 million limit of liability, which attached upon exhaustion of the $10 million in aggregate limits of the underlying insurance, it said.
Continental refused to pay Bankman-Fried’s covered expenses, despite numerous requests, the lawsuit said.
Bankman-Fried, chief executive officer of FTX Trading Ltd., is facing criminal charges over the collapse of FTX, as well as civil, regulatory and bankruptcy actions in various courts around the country, it said.
“While the policy contains a limited number of exclusions based on fraudulent, criminal and similar acts, the policy expressly carves out ‘costs, charges and expenses’ — which include defense costs — from those exclusions,” the suit said.
According to the lawsuit, primary insurer QBE and Beazley, which provided the first layer of excess coverage, paid Bankman-Fried’s claims to their policy limits.
An attempt to obtain comment from CNA Insurance, Continental Casualty’s parent company, was not immediately successful.
Bankman-Fried’s lawsuit charges Continental with breach of contract and insurer bad faith and seeks an order for Continental to cover his claims as well as punitive damages.
Cryptocurrency underwriter Relm Insurance Ltd. last year said it was reserving for potential losses related to the financial failure of virtual currency exchange FTX Trading Ltd.