FTX Is Taking Bankman-Fried's Parents to Court

Lawsuit seeking to claw back funds alleges Bankman, Fried 'ignored bright red flags'
By Rob Quinn,  Newser Staff
Posted Sep 19, 2023 5:15 PM CDT
FTX Sues to Claw Back Funds From SBF's Parents
FTX founder Sam Bankman-Fried leaves Manhattan federal court, June 15, 2023, in New York.   (AP Photo/Bebeto Matthews, File)

Joe Bankman and Barbara Fried are being sued by the company their son used to run. FTX filed a lawsuit against the couple late Monday, seeking to reclaim funds it claims were "fraudulently transferred and misappropriated" by Sam Bankman-Fried's parents, CNN reports. The lawsuit filed in a Delaware bankruptcy court alleges that the couple "exploited their access and influence within the FTX enterprise to enrich themselves." Bankman-Fried, 31, is due to go on trial Oct. 3 on federal fraud charges. The suit claim his parents, who have not been charged, "ignored bright red flags" pointing to their son's "vast fraudulent scheme."

Bankman and Fried are both tenured law professors at Stanford. Bankman was also a paid employee of the cryptocurrency exchange for around a year, and the lawsuit claims he "played a key role in perpetuating the culture of misrepresentations and gross mismanagement," the Wall Street Journal reports. According to the lawsuit, he received a $10 million gift from Bankman-Fried early last year on top of his $200,000 salary. Bankman-Fried also used company funds to help his parents acquire a $16 million luxury home in the Bahamas, according to the lawsuit.

According to the lawsuit, Bankman was deeply involved in the company's operations for its collapse and while Fried never held an official position at the firm, she played a major role in directing political contributions that added up to around $40 million ahead of last year's midterm elections, per the Journal. In a statement, the couple's lawyers said the claims are "completely false." They called the lawsuit a "dangerous attempt to intimidate Joe and Barbara and undermine the jury process just days before their child's trial begins." (More Sam Bankman-Fried stories.)

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