FTX sues founder Sam Bankman-Fried’s parents over missing millions
Bankrupted cryptocurrency firm FTX has sued the parents of founder and former CEO Sam Bankman-Fried, alleging that the pair siphoned millions of dollars out of the company through their son.
The company filed the suit Monday against Joseph Bankman and Barbara Fried, both Stanford law professors who, the suit alleges, held senior advisory roles in FTX and its market trading arm, Alameda Research.
Bankman served as legal counsel to the company and pressured his son to give him millions of dollars in cash and assets, the suit alleges. Fried held a similar advisory role and collected tens of millions for her charitable foundation, according to the suit.
The lawsuit aims to extract monetary damages from the pair as well as return any misappropriated FTX funds or assets.
“As Bankman-Fried’s parents, Bankman and Fried exploited their access and influence within the FTX enterprise to enrich themselves, directly and indirectly, by millions of dollars,” the suit reads.
Attorneys for Bankman and Fried vehemently denied the allegations in the suit.
“This is a dangerous attempt to intimidate Joe and Barbara and undermine the jury process just days before their child’s trial begins,” Bankman and Fried's lawyers wrote in a statement to The Wall Street Journal.
The suit alleges that Bankman pressured his son for a $10 million gift and the purchase of a $16 million Bahamas estate. Fried was the primary advisor on FTX’s political contributions, the suit claims, which topped $100 million.
It also claims Bankman violated his fiduciary duty to report and intervene on the rampant fraud which resulted in the downfall of the company last year.
The suit argues Bankman-Fried's parents were part of a small cadre of FTX insiders whose actions led to the company’s collapse after stock market investments failed.
“Bankman and Fried, tenured professors at what currently is ranked as the top U.S. law school, either knew — or ignored bright red flags revealing — that their son, Bankman-Fried, and other FTX Insiders were orchestrating a vast fraudulent scheme to profit and promote their personal and charitable agendas at the Debtors’ expense.,” the suit reads.
Bankman-Fried was charged with fraud and is in jail pending his trial next month.
The Hill has reached out to Stanford University for comment.