Sam Bankman-Fried’s Parents Sued by FTX
Debtors sue SBF's parents, alleging unjust enrichment through FTX. Lawsuit reveals financial gains and misuse of company funds.
Debtors of the now-bankrupt FTX crypto exchange have initiated legal action against SBF's parents, Joseph Bankman and Barbara Fried. The lawsuit alleges that the duo exploited their positions within FTX to unjustly enrich themselves. Contrary to SBF's claims, the debtors argue that his parents were deeply involved in FTX's operations from its inception until its downfall.
“Bankman-Fried’s parents, Bankman and Fried exploited their access and influence within the FTX enterprise to enrich themselves.”
The lawsuit points to significant financial gains made by Bankman and Fried due to their involvement with FTX. This includes a $10-million cash gift and a luxurious $16.4-million property in the Bahamas. Additionally, allegations suggest that Bankman utilized FTX funds for personal expenses, such as chartered jets and wealthy hotel stays.
Barbara Fried and Joseph Bankman, the parents of Sam Bankman-Fried.
Joseph Bankman, a renowned Stanford Law School professor, is alleged to have had a significant role within FTX. Initially contributing on a pro-bono basis, he gradually assumed the responsibilities of a "de facto" officer, guiding and overseeing FTX's operations. His expertise in tax law and his portrayal as a seasoned professional among a younger team further solidified his influence within the company. Bankman is said to have garnered the confidence of the team across various divisions, largely because of the vast difference in experience between him and other employees.
“Bankman portrayed himself as the proverbial adult in the room—and was uniquely positioned to fulfill that role—as he worked alongside inexperienced fellow executive officers, directors, and managers responsible for safeguarding billions of dollars.”
Barbara Fried, also a Stanford Law School professor, is said to have played a pivotal role in FTX's political donations. She reportedly served as a key advisor for FTX Group's political contributions, directing significant funds to "Mind the Gap" (MTG), a political action committee she co-founded.
Once a major player in the crypto exchange world, FTX ceased operations and filed for Chapter 11 bankruptcy in mid-November 2022. Following this, SBF faced arrest and was charged with multiple counts, including fraud, money laundering, and bribing officials. His trial, which is set to commence on October 3, will address charges related to fraudulent activities involving user funds at both FTX and Alameda Research.
Ahead of his trial, SBF has encountered numerous legal obstacles. Recent reports suggest that he has been in continuous disputes with prosecutors, particularly regarding the voir dire process for jury selection. While SBF aims to gauge potential jurors' familiarity with the case, prosecutors are pushing for more neutral questioning.