FTX Founder’s Parents Face Lawsuit Over Alleged Improper Money Transfers
Parents of Sam Bankman-Fried, the founder of cryptocurrency exchange FTX, are facing legal action amid allegations of improperly receiving millions of dollars from the crypto firm prior to its collapse. The bankruptcy managers of FTX have filed a lawsuit, accusing the couple of holding funds that were “fraudulently transferred” and failing to address misconduct within the company.
This legal action represents creditors seeking repayment following the firm’s bankruptcy, which ultimately led to Sam Bankman-Fried’s arrest last year. He stands accused by US prosecutors of illegally transferring funds from the exchange for purposes like covering losses at his trading firm, making political contributions, and purchasing property. However, he has denied these charges and awaits trial while in custody.
Attorneys representing Mr. Bankman-Fried’s parents have refuted the allegations, asserting they are “completely false” and aimed at damaging their son’s trial prospects.
The lawsuit, part of a broader bankruptcy case, contends that Sam Bankman-Fried’s parents, who were both professors at Stanford University at the time, exploited their connections within the FTX enterprise to enrich themselves by millions. Allegedly, they received a $10 million cash gift from funds associated with Alameda, an FTX partner firm, and were gifted a $16.4 million property in the Bahamas by FTX.
FTX was once a major player in cryptocurrency trading, with assets valued at approximately $15 billion in 2021.
According to the lawsuit, insiders at the company, including Sam Bankman-Fried and his parents, treated FTX as a “piggy bank,” with his parents allegedly benefiting from or contributing to this misconduct. The suit accuses Allan Joseph Bankman, an expert in US tax law and Sam’s father, of serving as an advisor to FTX and playing a role in perpetuating a culture of misrepresentation and mismanagement, as well as suppressing allegations of fraud.
Barbara Fried, Sam’s mother, is alleged to have directed her son’s political donations and encouraged him to obscure their origins.
FTX’s bankruptcy managers are pursuing the recovery of funds from Sam Bankman-Fried’s parents. The downfall of Sam Bankman-Fried, a prominent figure in the crypto industry, has intensified regulatory scrutiny and raised concerns within the sector.