As the spectacle knowingly or unwittingly orchestrated by Sam Bankman-Fried, cofounder of bankrupt cryptocurrency exchange FTX Trading and cryptocurrency trading firm Alameda Research, plays out on the global stage, plaintiff attorneys are eyeing a bonanza from knock-on lawsuits.

Executive Summary

The collapse of the cryptocurrency exchange was a gift to plaintiff lawyers plotting D&O, E&O and EPL litigation, management liability experts told Russ Banham. With insurance for FTX "up in smoke," the plaintiff bar needs to see who else in the line of fire is potentially liable, they said.

This contagion effect, where FTX/Alameda’s legal quagmire spreads widely to affect the hundreds of crypto exchanges and companies operating worldwide, as well as businesses that invested in cryptocurrencies and financial advisers who promoted high-risk crypto investments, is expected to produce claims against insurers providing directors and officers (D&O) liability, errors and omissions (E&O), and employment practices liability (EPL) insurance.

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