Debtors of the now-bankrupt cryptocurrency exchange FTX have taken legal action against the parents of the exchange’s founder, Sam “SBF” Bankman-Fried. These creditors allege that the parents, Joseph Bankman and Barbara Fried, misappropriated significant sums of money through their deep involvement in FTX’s operations.
Lawsuit Filed Against SBF’s Parents
On September 18, counsel representing FTX debtors and debtors-in-possession, led by the prestigious law firm Sullivan & Cromwell, initiated a lawsuit against Joseph Bankman and Barbara Fried. This legal action accuses the parents of exploiting their privileged access and influence within the FTX empire to amass wealth at the expense of FTX’s indebted estate.
The plaintiffs argue that Bankman and Fried played a substantial role in FTX from its inception to its unfortunate collapse, a claim that contradicts statements made by SBF himself.
The complaint filed by the plaintiffs states, “As early as 2018, Bankman described Alameda as a ‘family business’ — a phrase he repeatedly used to refer to the FTX Group. Even as the FTX Group descended into insolvency, Bankman and Fried profited handsomely from this ‘family business.'”
According to the allegations, SBF’s father, who is a professor at Stanford Law School, wielded considerable authority within FTX Group, effectively acting as its “de facto officer.” Bankman also held executive positions on FTX Group’s management team.
SBF’s mother, also a Stanford Law School professor, was reportedly deeply involved in FTX’s political contributions. The plaintiffs claim that Fried served as the “single most influential advisor” in FTX Group’s political donations, advocating for significant donations to Mind the Gap (MTG), a political action committee co-founded by her.
The complaint further asserts that Bankman and Fried benefited greatly from their association with FTX Group, including receiving a $10-million cash gift and a luxury property valued at $16.4 million in the Bahamas. Bankman is also accused of diverting FTX Group’s funds for personal expenses, such as private jet charters and extravagant hotel stays.
Call for Accountability
The creditors argue that Bankman and Fried either knowingly or negligently ignored signs that their son was orchestrating a fraudulent scheme to further their own interests, both personal and charitable, at the expense of FTX’s debtors. As a result, the plaintiffs are urging the court to hold them accountable for their actions and to recover assets for the creditors.
The complaint concludes with a request for “punitive damages in an amount to be determined at trial,” citing the defendants’ “conscious, willful, wanton, and malicious conduct.”
Response from SBF’s Counsel
In response to the lawsuit, counsel for Joseph Bankman and Barbara Fried, Sean Hecker and Michael Tremonte, issued a joint statement, describing the legal action as an attempt to undermine the upcoming trial of their child, SBF. They asserted that the claims were “completely false” and criticized the significant legal fees incurred by the creditors’ team.
As the legal battle unfolds, questions surrounding the involvement of SBF’s parents in FTX Group’s affairs and the alleged misappropriation of funds continue to captivate the cryptocurrency community. Stay tuned for further developments on this high-profile case.