FTX sues founder Bankman-Fried's mother and father

By Dietrich Knauth

NEW YORK (Reuters) – Bankrupt crypto change FTX on Monday sued the mother and father of founder Sam Bankman-Fried, saying that Stanford professors Joseph Bankman and Barbara Fried used the corporate to counterpoint themselves on the expense of FTX’s prospects.

FTX, now being led by turnaround specialist John Ray, mentioned that firm founder Sam Bankman-Fried ran FTX as a “household enterprise” and misappropriated billions in buyer funds for the advantage of a small circle of insiders, together with his mother and father.

Sam Bankman-Fried has pleaded not responsible to prices that he defrauded FTX prospects through the use of their funds to prop up his personal dangerous investments. He’s at present jailed forward of a trial scheduled to start Oct. 3. Different former FTX executives have pleaded responsible to legal prices.

Bankman and Fried’s attorneys, Sean Hecker and Michael Tremonte, mentioned in a joint assertion that FTX’s claims had been “utterly false” and that the brand new lawsuit was a waste of funds that may very well be returned to FTX prospects.

“This can be a harmful try to intimidate Joe and Barbara and undermine the jury course of simply days earlier than their little one’s trial begins,” Hecker and Tremonte mentioned.

FTX’s lawsuit alleges that Bankman and Fried accepted a $10-million money reward and a $16.4-million luxurious property within the Bahamas from FTX, whilst the corporate teetered on the point of collapse. Bankman and Fried additionally pushed FTX to make tens of thousands and thousands of {dollars} in charitable contributions, together with to Stanford College, FTX mentioned.

Bankman-Fried’s father, a tax specialist at Stanford Legislation Faculty, typically positioned himself because the “grownup within the room” in an organization run by his son, now 31, and different executives with little administration expertise. However Bankman “stayed silent” when he noticed warning indicators of fraud and did little to forestall FTX’s management from misappropriating buyer funds, in response to the lawsuit.

Fried was the strongest affect on FTX’s political contributions, inflicting Bankman-Fried and different executives to contribute thousands and thousands of {dollars} on to a political motion committee that she co-founded, in response to FTX.

FTX filed for chapter in November 2022 within the wake of claims that it misused and misplaced billions of {dollars} price of shoppers’ crypto deposits.

FTX has recovered greater than $7 billion in property to repay prospects, and it’s pursuing extra recoveries by lawsuits towards FTX insiders and different defendants that acquired cash from FTX earlier than it went bankrupt.