FTX founder’s parents reportedly sued by debtors for their involvement in their son’s fraud scheme 

Temitope Akintade
SBF parents. Bankman and Fried

According to a Coindesk report on Tuesday, FTX debtors have initiated legal proceedings against the parents of the company’s founder, Sam Bankman-Fried (SBF), to recover funds allegedly fraudulently transferred and misappropriated.

The SBF & FTX legal proceedings have had twists and turns since the turn of the year but this update is an interesting one. According to the report, Sam Bankman-Fried’s parents, Joseph Bankman and Barbara Fried who are both professors at Stanford Law School could be fully involved in the grand scheme fraud that was going on behind the once world’s largest crypto exchange.

FTX sues SBF parents

According to the Coindesk report, FTX sued founder and former CEO Sam Bankman-Fried’s parents, Joseph Bankman and Barbara Fried, to “recover millions of dollars in fraudulently transferred and misappropriated funds,” citing a Monday court filing.

The court document which refers to SBF’s mother as “Fried,” and Allan Joseph Bankman as “Bankman” asks the court to award FTX the return of any property given or payment made to the parents by the company in the past, and punitive damages resulting from “conscious, willful, wanton, and malicious conduct.”

Read also: FTX sues SBF and other executives for misappropriation of $1 billion

The filing said:

FTX Trading paid $18,914,327.82, inclusive of taxes, fees, and costs, for Blue Water, to which Bankman and Fried received title, as well as various expenses related to Blue Water totalling more than $90,000.”

Also, the filing alleged that Bankman’s knowledge of tax law and unique understanding of the Group’s muddled corporate structure allowed him to facilitate the transfer of a cash gift totalling $10 million to himself and Fried, consisting of Alameda Ltd. funds.

SBF parents. Bankman and Fried

Bankman and Fried deployed their decades of experience as sophisticated law professors and veneer of legitimacy not to help the FTX Group, but rather to plunder it in order to enrich themselves and their pet causes.

[Bankman] thus knew, or should have known, the perilous financial state of the FTX Group, even as he moonlighted as an actor in a Super Bowl commercial and extracted millions of dollars from the FTX Group.”

Additionally, the complaint states that Bankman helped other FTX insiders squander the company’s funds on donations and helped cover up a whistleblower complaint from September 2019.

Barbara Fried, on the other hand, was allegedly the poster figure for SBF’s political contribution strategy. According to the filing, she used her access and influence to benefit Mind the Gap (MTG) – an independent expenditure-only political action committee that she co-founded in 2018 and for which she served as President and Chair. Tens of millions of dollars were contributed to this ‘project’ at Barbara Fried’s request, per the filing.

Although the filing does not include the specific numbers of the amount Bankman and Fried may have misappropriated, it alleged that either or both of them may have expensed $1,200-per-night hotel stays, plane tickets and salaries. 

New filings reveal FTX owes Apple, Netflix, Binance, Stanford, others

Also, Bankman received an annual salary of $200,000 for his role as a senior adviser to the FTX foundation, more than $18 million for the property in the Bahamas and $5.5 million in FTX Group donations to Stanford University.

Read also: $FTT surges over 100% as FTX prepares for relaunch

Lastly, the filing says Bankman was among the group that attempted the last-minute sale of FTX to Binance in November 2022. 

Bankman was included in the small group that received the Binance Letter of Intent and a calendar invitation for a meeting with Binance scheduled for November 9, 2022. On November 10, 2022, the day before the Chapter 11 filing, Bankman was scheduled to meet with The Bahamas Prime Minister.”

We await comments from Bankman and Fried’s spokespeople. Note that the major culprit, Sam Bankman-Fried is still behind bars while he prepares for a trial next month.

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