Reuters reports that, FTX, the beleaguered cryptocurrency exchange, has taken legal action against the parents of its founder, Sam Bankman-Fried. The lawsuit, filed on Monday, accuses Stanford professors Joseph Bankman and Barbara Fried of utilizing the company for personal enrichment, allegedly at the expense of FTX’s customers.
Under the leadership of turnaround specialist John Ray, FTX contends that Sam Bankman-Fried operated the exchange as a “family business,” purportedly diverting billions in customer funds to a select group of insiders, including his parents. Bankman-Fried has entered a plea of not guilty to charges of defrauding FTX customers, asserting that the funds were utilized to support his own high-risk investments. He is currently incarcerated, awaiting trial set to commence on October 3. Former FTX executives have previously pleaded guilty to criminal charges.
Attorneys for Bankman and Fried, Sean Hecker and Michael Tremonte, issued a joint statement vehemently denying FTX’s allegations, labeling them as “completely false” and decrying the lawsuit as a squandering of funds that could be returned to FTX customers. They further assert that this legal action is a deliberate attempt to intimidate and undermine the jury process just days before their child’s trial.
FTX’s lawsuit maintains that Bankman and Fried accepted a $10-million cash gift and a $16.4-million luxury property in the Bahamas from FTX, even as the company faced imminent collapse. Additionally, the lawsuit alleges that Bankman and Fried pressured FTX to make substantial charitable donations, including sizable contributions to Stanford University.
Despite his role as a tax specialist at Stanford Law School, Bankman-Fried’s father positioned himself as the “adult in the room” within a company led by his 31-year-old son and other executives with limited management experience. The lawsuit contends that Bankman “remained silent” in the face of red flags indicating fraudulent activity and failed to take adequate steps to prevent FTX’s leadership from misappropriating customer funds.
Meanwhile, Fried wielded significant influence over FTX’s political contributions, reportedly directing Bankman-Fried and other executives to funnel millions of dollars directly into a political action committee co-founded by her.
As this legal battle unfolds, the cryptocurrency community watches with bated breath, awaiting further developments in the high-stakes clash between FTX and the parents of its embattled founder.
