Debtors of the bankrupt cryptocurrency exchange FTX have recently taken legal action against the parents of FTX founder, Sam Bankman-Fried. The debtors, represented by law firm Sullivan & Cromwell, filed a lawsuit on September 18th, accusing Joseph Bankman and Barbara Fried of misappropriating millions of dollars through their involvement in FTX’s business.
The plaintiffs alleged that Bankman and Fried used their access and influence within the FTX empire to enrich themselves at the expense of the debtors in the FTX bankruptcy estate. They claimed that SBF’s parents were actively involved in FTX’s operations from its inception to its collapse, contradicting Bankman-Fried’s previous statements.
The complaint stated that Bankman, a Stanford Law School professor, had significant decision-making authority within the FTX Group as its de facto officer. He also held executive positions on the FTX Group’s management team, according to the debtors’ arguments.
Fried, also a professor at Stanford Law School, was said to be heavily involved in FTX’s political donations. The plaintiffs alleged that she played a crucial role in FTX Group’s political contributions, consistently urging the company to donate substantial amounts to Mind the Gap (MTG), a political action committee that she co-founded.
Related Post
According to the complaint, Bankman and Fried benefited greatly from their involvement in the FTX Group, receiving a $10 million cash gift and acquiring a luxury property in The Bahamas worth $16.4 million. The debtors also claimed that Bankman used FTX Group’s funds for personal expenses, such as privately-chartered jets and expensive hotel stays.
The plaintiffs argued that Bankman and Fried either knew or turned a blind eye to red flags indicating that their son was orchestrating a fraudulent scheme, promoting their personal interests at the expense of the debtors. They called on the court to hold Bankman and Fried accountable for their misconduct and recover assets for the debtors’ creditors.
It is worth noting that Bankman and Fried have faced other difficulties since FTX’s collapse. They have encountered professional issues at Stanford Law School, and it has been reported that their son’s legal expenses are likely to have a severe financial impact on them.
FTX, once a prominent cryptocurrency exchange, ceased operations and filed for Chapter 11 bankruptcy in November 2022. SBF, the founder and former CEO of FTX, was subsequently arrested and charged with various crimes, including fraud, money laundering, and bribery. His trials are scheduled to begin on October 3rd, where he will face charges related to fraudulent activities involving user funds at FTX and Alameda Research.
In conclusion, the debtors of FTX have taken legal action against the parents of the exchange’s founder, alleging that they misappropriated millions of dollars through their involvement in FTX’s business. The plaintiffs claim that Bankman and Fried used their access and influence to enrich themselves at the expense of the debtors. They are seeking accountability and asset recovery for the benefit of the debtors’ creditors.
