FTX sues founder Bankman-Fried’s mother and father

Sep 19, 2023 | blog

By Dietrich Knauth

NEW YORK (Reuters) – Bankrupt crypto alternate FTX on Monday sued the mother and father of founder Sam Bankman-Fried, saying that Stanford professors Joseph Bankman and Barbara Fried used the corporate to counterpoint themselves on the expense of FTX’s clients.

FTX, now being led by turnaround specialist John Ray, stated that firm founder Sam Bankman-Fried ran FTX as a “family business” and misappropriated billions in buyer funds for the advantage of a small circle of insiders, together with his mother and father.

Sam Bankman-Fried has pleaded not responsible to expenses that he defrauded FTX clients by utilizing their funds to prop up his personal dangerous investments. He is at present jailed forward of a trial scheduled to start Oct. 3. Other former FTX executives have pleaded responsible to prison expenses.

Bankman and Fried’s attorneys, Sean Hecker and Michael Tremonte, stated in a joint assertion that FTX’s claims have been “completely false” and that the brand new lawsuit was a waste of funds that may very well be returned to FTX clients.

“This is a dangerous attempt to intimidate Joe and Barbara and undermine the jury process just days before their child’s trial begins,” Hecker and Tremonte stated.

FTX’s lawsuit alleges that Bankman and Fried accepted a $10-million money present and a $16.4-million luxurious property within the Bahamas from FTX, at the same time as the corporate teetered getting ready to collapse. Bankman and Fried additionally pushed FTX to make tens of tens of millions of {dollars} in charitable contributions, together with to Stanford University, FTX stated.

Bankman-Fried’s father, a tax specialist at Stanford Law School, typically positioned himself because the “adult in the room” in an organization run by his son, now 31, and different executives with little administration expertise. But Bankman “stayed silent” when he noticed warning indicators of fraud and did little to stop FTX’s management from misappropriating buyer funds, in keeping with the lawsuit.

Fried was the strongest affect on FTX’s political contributions, inflicting Bankman-Fried and different executives to contribute tens of millions of {dollars} on to a political motion committee that she co-founded, in keeping with FTX.

FTX filed for chapter in November 2022 within the wake of claims that it misused and misplaced billions of {dollars} price of consumers’ crypto deposits.

FTX has recovered greater than $7 billion in property to repay clients, and it’s pursuing extra recoveries via lawsuits in opposition to FTX insiders and different defendants that acquired cash from FTX earlier than it went bankrupt.

(Reporting by Dietrich Knauth, Editing by Nick Zieminski)

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