- FTX Crypto Exchange Files Lawsuit Against Sam Bankman-Fried’s Parents for Alleged $10 Million Misappropriation
- Allegations Include Personal Gain Through Exploitation of FTX’s Corporate Structure
In a recent legal filing, managers of the bankrupt firm FTX have levelled accusations against a couple, alleging their involvement in the wrongful retention of millions of dollars obtained through fraudulent means, all while ignoring the misconduct occurring within the company.
The collapse of the company subsequently led to the arrest of Mr. Sam Bankman-Fried. FTX, currently under the leadership of turnaround specialist John Ray, has claimed that its founder, Sam Bankman-Fried, managed FTX like a ‘family business,’ diverting billions in customer funds to a select group of insiders, which included his own parents.
Joseph Bankman and Barbara Fried, both distinguished tenured professors at Stanford Law School, now face allegations of engaging in fraudulent transfers, breaching their fiduciary duties, and unjustly enriching themselves, among other wrongdoings. These allegations have been brought forth in a legal complaint filed in Delaware District Court on Monday.
The lawsuit contends that Bankman, who took a leave of absence from Stanford and joined FTX US as an employee, played an advisory role in various entities within the FTX Group, exploiting his influence to benefit himself, his associates, and his family.
“Given his background, positions, and proximity to his son, Bankman-Fried, Bankman held significant influence and was well-positioned to enforce internal controls and raise concerns about misconduct within the FTX Group,” asserts the complaint.
As per the plaintiffs’ claims, SBF’s father, a Stanford Law School professor, wielded significant authority within FTX Group, effectively serving as its “de facto officer.” Furthermore, Bankman held key executive positions within FTX Group’s management team, according to the debtors’ assertions.
SBF’s mother, also a Stanford Law School professor, played an active role in FTX’s political contributions, as outlined by the plaintiffs. The allegations suggest that Fried acted as the “primary and most influential advisor” in FTX Group’s political donations, repeatedly advocating for substantial contributions directly to Mind the Gap (MTG), a political action committee she co-founded.
The document stated that Barbara Fried assumed the pivotal role of being the primary coordinator for SBF’s political contribution strategy. Furthermore, it asserted that she leveraged her connections and authority to advance the interests of MTG (Mind the Gap), an independent expenditure-only political action committee that she co-founded in 2018, where she held the positions of President and Chair.
According to the filing, at Barbara Fried’s direct behest, “tens of millions of dollars” were channeled into MTG or causes supported by MTG.