FTX’s legal team has its hands full

The bankrupt crypto exchange is fighting court battles on multiple fronts, and ex-CEO Sam Bankman-Fried's attorneys say the U.S. government is overdue to supply evidence in its case against him.

Screenshot, House Financial Services Committee YouTube

Seven months after its cryptosphere-rocking bankruptcy, the legal team at FTX has its hands full.

The bankrupt crypto exchange is at odds with also-bankrupt crypto lender Genesis over how much money it's owed, according to a Friday court filing.

While FTX asserts Genesis owes it $3.9 billion, Genesis insists that figure is $0.00.

The court filing, related to Genesis’ bankruptcy, indicated that Genesis neglected to invite FTX to mediation talks, despite FTX's claim that it is a major creditor of Genesis.

In a May 3 filing, FTX called Genesis "one of the main feeder funds for FTX and instrumental to its fraudulent business model."

However, Genesis said addressing FTX's claims could cause undue delay in Genesis’ bankruptcy proceedings as the lender "expeditiously pursue[s] confirmation of a Chapter 11 plan," court documents show.

U.S. Bankruptcy Judge Sean Lane on Monday said he wouldn't be opening Genesis’ settlement talks to FTX, and that Genesis and its largest creditors could have more time to discuss payouts to creditors, Bloomberg reported.

"There will be a certain amount of radio silence because mediation needs that to work," Lane said, according to the wire service. "Shortening the mediation does not shorten the case."

Meanwhile, FTX founder Sam Bankman-Fried's legal team Monday expressed concern that the federal government was late to submit evidence due for discovery in late March in its criminal case against him. Bankman-Fried faces 12 charges including wire fraud and conspiracy to commit campaign finance violations.

In a letter addressed to U.S. District Judge Lewis Kaplan, Bankman-Fried's attorneys said the government hadn't turned over all of the contents of five electronic devices due for discovery, including former Alameda Research CEO Caroline Ellison's laptop and iPhone and FTX co-founder Gary Wang's laptop, within the timeline promised.

These five devices include over 3.6 million documents and over 10 million pages, according to the letter. The government on May 25 produced Ellison's laptop and those of two other FTX employees — a production that more than triples the documents in existing discovery, attorney Mark Cohen wrote.

"As the trial date is now less than four months away, the defense is concerned that the late production of such voluminous and important discovery will impact the preparation of the defense," Cohen wrote.

While Bankman-Fried doesn't "wish to adjourn" the trial date, the letter noted he "may seek leave to file additional motions if the newly produced discovery provides new grounds for motions, including moving the Court to preclude the Government from using evidence produced too close to the trial date."

Elsewhere, eight lawsuits filed against celebrity endorsers and financial backers of FTX were consolidated into one multidistrict litigation in Florida by a judicial panel Monday.

U.S. District Judge K. Michael Moore of the Southern District of Florida will handle the multidistrict litigation, a legal proceeding designed to reduce the burden on federal courts and make litigation more convenient for parties involved.

Several class-action lawsuits have been filed against venture-capital and private-equity firms perceived as enabling Bankman-Fried in the alleged fraud that resulted in the company's downfall.

The firms include crypto-heavy Sequoia Capital and Thoma Bravo, and several suits also take aim at FTX's celebrity endorsers.

Celebrity endorsers include athletes Tom Brady, Naomi Osaka and Shaquille O’Neal, model Gisele Bundchen and comedian Larry David.

Because of its Chapter 11 filing, FTX is protected from the litigation against its celebrity endorsers and financial backers.

Plaintiffs, however, have been seeking multidistrict litigation against FTX's celebrity endorsers and financial backers, calling the litigation "unwieldy" last month at a hearing in Philadelphia, Bloomberg reported.

Plaintiffs were helped in part by Dan Friedberg, FTX's former chief compliance officer, according to Fortune.

Though Friedberg was originally listed as a defendant in the complaint, he struck a deal releasing him from liability when he called the plaintiffs’ lawyers to "say that I wanted to cooperate and assist for the benefit of the FTX customers," Fortune reported.

New York's Metropolitan Museum of Art, a beneficiary-turned-victim of Bankman-Fried's attempts at effective altruism, agreed Friday to give back $550,000 it received from FTX prior to the exchange's collapse.

FTX subsidiary West Realm Shires Services gave the Met the funds between March and May of last year.

"The Met wishes to return the Donations to the FTX Debtors, and the FTX Debtors and the Met have engaged in good faith, arm's length negotiations concerning the return," said the filing by FTX, with expected repayment one month after judicial approval.

Bankman-Fried made numerous sizable donations during his time at FTX's helm, and leaders of the post-Bankman-Fried FTX are looking to recoup such donations with the intention of repaying creditors.

The University of Toronto said in February that it would return a nearly $500,000 research grant to the bankrupt exchange, according to The Logic; and at the end of 2022, machine-learning focused Alignment Research Center said it planned to return $1.25 million given to them by FTX's nonprofit arm FTX Foundation because "this money morally (if not legally) belongs to FTX customers or creditors."

In its quest to pay back creditors, FTX may strike gold with an investment it had made under Bankman-Fried in an artificial intelligence startup called Anthropic, Semafor reported Tuesday.

FTX owned $500 million in Anthropic stock at the time of its bankruptcy, according to the crypto exchange's balance sheet.

Perella Weinberg, the boutique investment bank in charge of selling FTX businesses during its reorganization, has been "teasing the sale of hundreds of millions of dollars of shares in Anthropic to potential investors," Semafor said, citing people familiar with the matter.

While it's "unclear how ... Bankman-Fried arrived at that valuation" of FTX's stock in Anthropic, if true, sale of that ownership would fetch nine figures, which would then be used to pay FTX creditors, Semafor reported.