Bankrupt crypto exchange FTX has lodged legal action against founder and former CEO Sam Bankman-Fried’s parents, Joseph Bankman and Barbara Fried, alleging that they misappropriated millions of dollars of customer funds through their involvement in the exchange’s business.
FTX Bankruptcy Estate Aims To Claw Back Millions Stolen By SBF’s Parents
Joseph Bankman and Barbara Fried, the parents of the collapsed crypto exchange’s founder, Sam Bankman-Fried, have found themselves in a legal conundrum.
A 63-page court filing on Monday submitted to the U.S. Bankruptcy Court for the District of Delaware showed that debtors of FTX and its affiliated firm Alameda Research filed a complaint to “recover millions of dollars in fraudulently transferred and misappropriated funds”.
“As Bankman-Fried’s parents, Bankman and Fried exploited their access and influence within the FTX enterprise to enrich themselves, directly and indirectly, by millions of dollars, and knowingly at the expense of the debtors in these Chapter 11 Cases and their creditors,” the filing noted.
The FTX ‘Family Business’
The lawsuit further noted that Sam Bankman Fried’s parents were “very much involved” in the FTX business from inception to its implosion last November, contrary to what the FTX founder claimed.
The court document pointed out that despite touting itself to the public as a sophisticated group of cryptocurrency exchanges and businesses, the FTX Group was a self-proclaimed “family business,” adding: “And together, Bankman and Fried siphoned millions of dollars out of the FTX Group for their own personal benefit and their chosen pet causes.”
In February 2022, Joseph and Barbra, both professors at Stanford Law School, reportedly purchased a luxurious 30,000-square-foot property in The Bahamas, referred to as “Blue Water” or “Old Fort Bay”. Legal filings indicated that the full cash payment for this purchase totaled over $18 million, inclusive of taxes and fees, with all funds procured from the debtors and none contributed by SBF’s parents personally.
As per the plaintiffs, SBF’s father had sweeping authority to make decisions for FTX Group as its “de facto officer”, while his mother served as the “single most influential advisor” in FTX Group’s political and charitable contributions.
The debtors urged the court to hold SBF’s parents accountable for their misconduct and recover assets for the debtors’ creditors, positing:
“Award plaintiffs punitive damages in an amount to be determined at trial resulting from defendants’ conscious, willful, wanton, and malicious conduct, which exhibits a reckless disregard for the interests of plaintiffs and their creditors.”
Sam Bankman-Fried is prepping for a trial in October while behind bars. The disgraced FTX founder is facing a series of criminal charges, including wire fraud and money laundering, to which he pleaded not guilty.