FTX sues founder Sam Bankman-Fried’s parents, accusing them of misusing company assets

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Failed crypto exchange FTX sued the parents of founder Sam Bankman-Fried on Monday, claiming that Stanford professors Joseph Bankman and Barbara Fried used the company to enrich themselves at the expense of FTX customers.

FTX, now run by turnaround specialist John Ray, said the company’s founder, Sam Bankman-Fried, ran FTX like a “family business” and diverted billions of customer funds to a small circle of initiates, including his parents.

Sam Bankman-Fried has pleaded not guilty to charges that he defrauded FTX clients by using their funds to finance his own risky investments. He is currently imprisoned ahead of his trial which is due to begin on October 3. Other former FTX executives have pleaded guilty to criminal charges.

Bankman and Fried’s lawyers, Sean Hecker and Michael Tremonte, said in a joint statement that FTX’s claims were “completely false” and that the new lawsuit was a waste of funds that could be returned to FTX customers.

“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 said.

FTX’s lawsuit alleges that Bankman and Fried accepted a $10 million (nearly Rs. 83 crore) cash gift and a $16.4 million (nearly Rs. 136 crore) luxury property in the Bahamas from FTX, even as the company was on the brink of collapse. collapse. Bankman and Fried also pushed FTX to make tens of millions of dollars in charitable contributions, including to Stanford University, FTX said.

Bankman-Fried’s father, a tax expert at Stanford Law School, often positioned himself as “the adult present” in a company run by his son, now 31, and other executives with little experience. management experience. But Bankman “remained silent” when he saw warning signs of fraud and did little to stop FTX executives from misappropriating customer funds, according to the lawsuit.

Fried had the greatest influence on FTX’s political contributions, leading Bankman-Fried and other executives to directly contribute millions of dollars to a political action committee she co-founded, according to FTX.

FTX filed for bankruptcy in November 2022 following allegations that it misused and lost billions of dollars of its customers’ crypto deposits.

FTX has recovered more than $7 billion (nearly Rs. 58,300 crore) in assets to repay its customers, and it is pursuing additional recoveries through lawsuits against FTX insiders and other defendants who received money from FTX before its bankruptcy.

© Thomson Reuters 2023

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