Barbara Fried, mom of Sam Bankman-Fried, the founding father of bankrupt cryptocurrency trade FTX, leaves the courthouse, after U.S choose revoked Bankman-Fried’s bail, in New York, August 11, 2023.
Eduardo Munoz | Reuters
Bankrupt crypto trade FTX is seeking to claw again luxurious property and “tens of millions of {dollars} in fraudulently transferred and misappropriated funds” from the mother and father of Sam Bankman-Fried, the trade’s disgraced ex-CEO and founder.
In a Monday court docket submitting, legal professionals representing the chapter property of the failed trade alleged that Allan Joseph Bankman and his spouse, Barbara Fried, “exploited their entry and affect throughout the FTX enterprise to counterpoint themselves, straight and not directly, by tens of millions of {dollars}.”
The lawsuit, which was filed in a U.S. District Courtroom in Delaware, goes on to say that “regardless of realizing or blatantly ignoring that the FTX Group was bancrupt or on the point of insolvency,” Bankman and Fried mentioned with their son the switch of a $10 million money present and a $16.4 million luxurious property in The Bahamas.
The go well with goes on to allege that as early as 2019, Sam’s father straight participated in efforts to cowl up a whistleblower grievance which threatened to “expose the FTX Group as a home of playing cards.” The submitting additionally particulars emails written by Bankman by which he complained to the FTX US Head of Administration that his annual wage was $200,000, when he was “presupposed to be getting $1M/yr.”
That grievance was in the end elevated to his son in an e-mail, in response to the lawsuit: “Gee, Sam I do not know what to say right here. That is the primary [I] have heard of the 200K a yr wage! Placing Barbara on this.”
The submitting characterizes the correspondence as Bankman lobbying his son to “massively improve his personal wage.” Inside two weeks, the go well with claims that Bankman-Fried had collectively gifted his mother and father $10 million in funds coming from Alameda, and inside three months, the couple was deeded the $16.4 million property in The Bahamas.
In response to the partially-redacted submitting, Bankman-Fried’s mother and father additionally “pushed for tens of tens of millions of {dollars} in political and charitable contributions, together with to Stanford College, which have been seemingly designed to spice up Bankman’s and Fried’s skilled and social standing.” Fried can be accused of encouraging her son and others throughout the firm to keep away from, if not violate, federal marketing campaign finance disclosure guidelines by “participating in straw donations or in any other case concealing the FTX Group because the supply of the contributions.”
Bankman-Fried’s mother and father are authorized students who taught at Stanford Regulation Faculty. His mom is an professional on ethics, whereas his father focuses on taxes. Bankman-Fried himself independently faces a number of wire and securities fraud costs associated to the alleged multibillion-dollar FTX fraud.
Federal prosecutors and regulators allege that Bankman-Fried was the driving force of “one of many largest monetary frauds in American historical past,” within the phrases of U.S. Lawyer Damian Williams. The Justice Division has charged the previous FTX CEO with utilizing billions of {dollars} in buyer cash to fund VC investments, purchase property and make political donations. Bankman-Fried has pled not responsible to all costs, and his legal trial kicks off on Oct. 3 in Manhattan.
Bankman and Fried “both knew — or ignored vibrant crimson flags revealing — that their son, Bankman-Fried, and different FTX Insiders have been orchestrating an unlimited fraudulent scheme,” the lawsuit stated.
FTX’s new management staff has spent months making an attempt to piece again collectively billions of {dollars} in lacking property belonging to the digital asset trade.
The trade’s lawsuit towards Bankman-Fried’s mother and father asks for a mixture of compensatory aid, together with punitive damages ensuing from Bankman and Fried’s “acutely aware, willful, wanton, and malicious conduct,” in addition to the return of any property or funds made to the pair from FTX. If a choose guidelines in favor of the bankrupt trade, it’s unclear how the clawbacks would possibly have an effect on Bankman and Fried’s means to pay for his or her son’s authorized charges as he heads to trial subsequent month.
Authorized counsel for Bankman and Fried stated in a written assertion to CNBC that FTX’s Tuesday’s submitting “is a harmful try to intimidate Joe and Barbara and undermine the jury course of simply days earlier than their kid’s trial begins,” including that “these claims are utterly false.”
“Mr. Ray and his large staff of legal professionals, who’re collectively working up numerous tens of millions of {dollars} in charges whereas returning comparatively little to FTX shoppers, know higher,” continues the assertion from Bankman and Fried’s attorneys.
