According to a recent report, Joseph Bankman and Barbara Fried, the parents of FTX founder Sam Bankman-Fried (SBF), are now facing legal action.
Debtors of the now-bankrupt cryptocurrency exchange FTX allege that the couple illicitly pocketed millions. Filed on Sept. 18 by Sullivan and Cromwell, the legal firm representing the debtors, the lawsuit adds another layer to an already complex case.
Charges of Fraudulent Scheme and Political Influence
Besides the controversy surrounding their son, who is facing several charges, including fraud and money laundering, Bankman and Fried are accused of misconduct. Moreover, the plaintiffs suggest that the couple had a significant role in the company from its inception to its bankruptcy, contrary to SBF’s previous claims.
FTX founder’s parents sued, accused of stealing millions from crypto exchange
According to the allegations, Sam Bankman-Fried’s father, Joseph Bankman, was a “de facto officer” at FTX Group.
— Mr Legend Crypto (@mrlegendcrypto) September 19, 2023
Significantly, Joseph Bankman, a Stanford Law School professor, is described as a “de facto officer” who held executive positions at FTX Group. Consequently, he had broad authority to make crucial business decisions. On the other hand, Barbara Fried, also a professor at Stanford Law, is said to have been actively involved in political donations via FTX. She even allegedly pushed for contributions to her co-founded Mind the Gap (MTG) political action committee.
Therefore, both parents are being held accountable for allegedly stealing substantial funds from the deal. Significantly, these allegations include a financial gift of $10 million and a beautiful home in The Bahamas for $16.4 million. Even more suspicious is the fact that the plaintiffs say the couple spent corporate money on things like private planes and five-star accommodations.
— Forbes (@Forbes) March 29, 2023
Red Flags and Consequences
The legal action also argues that Bankman and Fried were either aware of or deliberately ignored indicators suggesting their son was orchestrating a fraudulent scheme. The debtors have thus requested the court hold the parents accountable for their alleged misconduct and recover the creditors’ assets. They seek punitive damages, claiming the couple acted with “conscious, willful, wanton, and malicious conduct.”
Meanwhile, SBF is already in hot water, accused of using more than $100 million in customer deposits for political contributions to Democratic and Republican campaigns. According to prosecutors, he intended to gain regulatory favor for FTX. With trials slated to begin in October, the former CEO remains in custody after a judge cited concerns about attempts to intimidate witnesses.
SBF just arrived to court – a judge could send him to jail this afternoon over witness tampering. Here’s a primer ahead of the hearing: https://t.co/7xA205agrD w/ @DawnGiel https://t.co/tb29du8WGY pic.twitter.com/shdjrbPeTG
— MacKenzie Sigalos (@KenzieSigalos) August 11, 2023
Family Affair Turns Legal Nightmare
In light of these developments, the FTX case has become even more tangled, implicating the founder and his immediate family. Joseph Bankman and Barbara Fried, both of whom were Stanford Law School professors, have had their professional lives thrown into disarray. Additionally, with SBF’s legal bills mounting, the couple has reportedly told friends that the legal expenses might financially ruin them.
The lawsuit against SBF’s parents is an alarming twist in a complicated case that has captivated the cryptocurrency community and beyond. As investigations proceed and trials loom, the scope and scale of the FTX scandal continue to unravel, taking down not just a once-prominent business but an entire family involved in its operations.