Debtors of the bankrupt cryptocurrency exchange FTX have launched authorized motion in opposition to the parents of FTX founder Sam “SBF” Bankman-Fried, alleging that they misappropriated millions of {dollars} via their involvement within the exchange’s enterprise.
The counsel for FTX debtors and debtors-in-possession, represented by the regulation agency Sullivan & Cromwell, filed a lawsuit in opposition to SBF’s parents, Joseph Bankman and Barbara Fried, on Sept. 18.
The plaintiffs argued that Bankman and Fried exploited their entry and affect throughout the FTX empire to complement themselves on the expense of the debtors within the FTX chapter property. The debtors alleged that SBF’s parents had been “very much involved” within the FTX enterprise from inception to break down, opposite to what SBF has claimed.
“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,’” the criticism reads.
According to the plaintiffs, SBF’s father, a Stanford Law School professor, had broad authority to make selections for FTX Group as its “de facto officer.” Bankman additionally held govt positions on FTX Group’s administration staff, the debtors argued.
SBF’s mom, additionally a Stanford Law School professor, was actively concerned in FTX’s political donations, the plaintiffs wrote. According to the allegations, Fried served because the “single most influential advisor” in FTX Group’s political contributions, repeatedly calling upon FTX to donate millions on to Mind the Gap (MTG), a political motion committee that she co-founded.
According to the criticism, Bankman and Fried extracted important unearned rewards from their involvement in FTX Group, together with a $10-million cash gift and a $16.4-million luxury property in the Bahamas. Bankman additionally siphoned off FTX Group’s cash to cowl prices, together with privately chartered jets and $1,200-per-night resort stays, the plaintiffs alleged.
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By draining FTX Group’s funds to their profit, Bankman and Fried both knew or ignored purple flags revealing that their son was orchestrating a fraudulent scheme to advertise their private and charitable pursuits on the debtors’ value, the plaintiffs stated. The debtors known as on the courtroom to carry Bankman and Fried accountable for his or her misconduct and get well belongings for the debtors’ collectors, stating:
“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.”
Bankman and Fried’s counsels Sean Hecker and Michael Tremonte subsequently described the lawsuit as an try to “undermine the jury course of simply days earlier than their baby’s trial begins” in a joint assertion to Cointelegraph. They wrote:
“These claims are fully false. Mr. Ray and his huge staff of attorneys, who’re collectively working up numerous millions of {dollars} in charges whereas returning comparatively little to FTX purchasers, know higher.”
As beforehand reported, Bankman and Fried started facing professional issues at Stanford Law School quickly after FTX collapsed. In late 2022, SBF’s parents additionally reportedly told pals that their son’s authorized payments would seemingly wipe them out financially.
Once a significant cryptocurrency exchange, FTX stopped working and filed for Chapter 11 bankruptcy in mid-November 2022. FTX founder and former CEO SBF was subsequently arrested and charged with 13 counts, together with fraud, cash laundering and bribing officers. SBF’s first of two trials is scheduled to begin on Oct. 3, the place he’ll face seven costs associated to fraudulent actions involving person funds at FTX and Alameda Research.
