FTX Sues Sam Bankman-Fried’s Parents Alleging Misappropriation And Influence Peddling

(CTN NEWS) – FTX has initiated a lawsuit against the parents of Sam Bankman-Fried, alleging that they unlawfully gained substantial sums of money by diverting funds from the cryptocurrency exchange established by their son.

In a recent court submission made on Monday evening, the FTX creditors asserted that Joseph Bankman and Barbara Fried, both holding tenured positions at Stanford Law School, were involved in this alleged misconduct.

Bankman, a tax attorney, was accused of showering gifts upon his friends and family using FTX funds. Allegedly, these gifts included, on one occasion, providing flights and tickets to the Formula One Grand Prix in France.

Fried leveraged her influence to secure substantial donations from Bankman-Fried and an associate for Mind the Gap, a super PAC she co-founded with the aim of aiding Democrats in winning office during the 2020 US election cycle.

Additionally, it was claimed that she exerted pressure on certain FTX insiders to potentially evade or violate federal campaign finance laws by skirting disclosure requirements.

Bankman-Fried, who was arrested in December after FTX’s financial troubles came to light, had previously stated that his parents were not involved in any relevant aspects of the business and they have not faced any charges.

Attorneys Counter Creditors’ Claims of Involvement by Bankman and Sam Bankman-Fried in FTX Operations

However, attorneys representing the FTX creditors, who have been working to recover assets from individuals and entities linked to the now-defunct exchange, asserted that the reality was quite different.

They claimed that “Bankman and Fried were deeply involved—from the inception of the FTX Group until its collapse.”

They went on to state, “As early as 2018, Bankman referred to Alameda as a ‘family business,’ a term he consistently used when referring to the FTX Group.” Alameda Research served as FTX’s affiliated hedge fund.

Even as FTX faced rapid financial deterioration and insolvency last year, the debtors alleged that Bankman and Fried were in discussions with Bankman-Fried regarding the transfer of a $10 million cash gift and a $16.4 million luxury property in the Bahamas.

In a joint statement, lawyers representing Bankman and Fried expressed their concerns, stating, “This is a troubling attempt to intimidate Joe and Barbara and undermine the jury process, coming just days before their child’s trial is set to begin.”

They went on to assert that the claims made by the FTX debtors were “completely untrue.”

Bankman-Fried is currently in custody, awaiting trial in October on multiple criminal charges, and he has pleaded not guilty.

Former FTX Executive Ryan Salame’s Guilty Plea in Unlawful Contributions Case

Earlier this month, former FTX executive Ryan Salame, who had become a significant Republican donor during the 2022 midterm elections, admitted guilt in a plea deal related to conspiring to make unlawful political contributions and operating an unlicensed money-transmitting business.

He became the fourth member of Bankman-Fried’s inner circle to reach such an agreement, following Gary Wang, Caroline Ellison, and Nishad Singh, who also entered guilty pleas.

While prosecutors have not yet charged Bankman-Fried’s parents, the FTX debtors asserted that they “either had knowledge of—or turned a blind eye to glaring warning signs—that their son… and other FTX insiders were orchestrating an extensive fraudulent scheme.”

Separately, on Tuesday, a federal appeals court in New York heard arguments from Bankman-Fried’s lawyers, who claimed that he was unjustly incarcerated last month after allegedly attempting to intimidate witnesses by disclosing details of his relationship with Ellison to The New York Times.

Mark Cohen, who represents Bankman-Fried, argued that his client was unable to adequately prepare for trial, and the government’s arrangements for him to access an internet-enabled laptop were inadequate due to an extremely slow internet connection.

The panel of judges appeared unsympathetic, with Judge William Nardini remarking, “At a certain point, he makes his own bed, he sleeps in it.” The court is expected to issue its ruling at a later time.

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