FTX sues Sam Bankman-Fried's parents for allegedly misappropriating company funds
FTX, a cryptocurrency company, is suing the parents of its founder Sam Bankman-Fried, accusing them of misappropriating company funds for personal gain. The lawsuit alleges that Joseph Bankman and Barbara Fried, both Stanford Law School professors, received millions of dollars in gifts and donations from their son's company. CEO John Jay Ray III, a turnaround expert, is currently at the helm of FTX. This legal action marks the first time FTX has pursued a case against Bankman-Fried's parents.
Accusations of gifts, luxury homes, and political contributions
The lawsuit alleges that Bankman and Fried received a $10 million gift and a $16.4 million luxury home in the Bahamas from FTX, despite knowing or blatantly ignoring the company's insolvency or impending insolvency. Additionally, the couple is accused of advocating for tens of millions of dollars in company funds to be used for political and charitable contributions, including donations to Stanford University and Mind the Gap, a leftwing super political action committee co-founded by Fried.
Bankman accused of covering up FTX mismanagement
FTX also accuses Bankman, a tax specialist, of attempting to help cover up mismanagement and fraud within the company. The lawsuit states that he portrayed himself as "the proverbial adult in the room" while working alongside inexperienced executive officers, directors, and managers responsible for safeguarding billions of dollars. The couple has not publicly commented on the lawsuit. However, a spokesperson previously stated that Bankman worked for FTX for 11 months, primarily identifying health-related charities.
Sam Bankman-Fried facing federal charges
Sam Bankman-Fried is currently facing seven counts of federal charges, including fraud and money laundering. After spending months under house arrest at his parents' home in Palo Alto, he was sent to a Brooklyn jail in August following a judge's ruling that he had tampered with witnesses. Bankman-Fried's lawyers are fighting for his release from prison ahead of his trial, which is set to start on October 3.
FTX went bankrupt last year
FTX filed for bankruptcy in November 2022 amid accusations of misusing and losing billions in customer cryptocurrency deposits. Since then, the company has successfully recovered more than $7 billion in assets to compensate its customers, and it continues to seek additional recoveries through lawsuits targeting FTX insiders and other parties who received funds before the bankruptcy.
