Nearly a year after the cryptocurrency exchange first filed for bankruptcy, the FTX saga continues to unfold. In 2023, the cryptocurrency exchange has moved to sue founder Sam Bankman-Fried and obtain compensation from creditors. In a new court filing, the cryptocurrency exchange has filed a lawsuit against the disgraced CEO. Parents took action.
FTX Wants Sam Bankman-Fried’s Parents
Sam Bankman-Fried’s trial is scheduled to take place on October 3, barring any delays, meaning there are just two weeks left before the trial begins. However, FTX still isn’t backing down as it has now dragged SBF’s parents into the fray.
The parents of the exchange’s mysterious founders, Allan Joseph Bankman and Barbara Fried, were named in a filing in U.S. Bankruptcy Court in Delaware . The filing alleges that his parents, both law professors at Stanford Law School, abused their influence to fraudulently transfer and misappropriate funds from the cryptocurrency exchange while it was still operating.
The filing states that millions of dollars were transferred to parties that exploited the FTX Enterprises “to enrich themselves, directly or indirectly, by millions of dollars and to intentionally harm the debtors in these Chapter 11 cases (the “Debtors”) or the “FTX Group”) and its creditors.
Additionally, the filing states that the exchanges and their subsidiaries operate as self-proclaimed “family businesses,” despite being presented to the public otherwise. The elder Bankman is said to be “actively involved in the business” and was an early investor in FTX Group sister company Alameda.
Mother Barbara Fried is also said to be actively involved in the business, often touting herself as son Sam Bankman-Fried’s “non-criminal partner in crime.” The pair are said to have continued to expand their influence and control over the company even as it teetered on the brink of bankruptcy.
SBF parents ignore the obvious
Among a series of allegations against Sam Bankman-Fried’s parents, the FTX filing alleges that, given their backgrounds, both parents knew or ignored red flags that suggested exchange executives were running a fraudulent scheme.
While the company was on the brink of bankruptcy, the parents allegedly continued discussions and received a $10 million cash gift and a $16.4 million property in the Bahamas.
Additionally, SBF’s parents “facilitated tens of millions of dollars in political and charitable contributions, including to Stanford University, that appeared to be designed to enhance the professional and social standing of Bankman and Fried at the expense of FTX Group and to the detriment of for the benefit of FTX Group’s customers and other creditors. “
Fried is also accused of encouraging SBF and others at the company to donate straw to help them circumvent federal campaign finance rules. In this way, they were able to hide the fact that the donations actually came from the FTX Group.
The SBF trial, which began in early October, is expected to be one of the most high-profile cryptocurrency fraud cases to date. The founders have been making court demands while in detention, but most have not been met.
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