The FTX saga continues to unfold almost one year after the crypto exchange first filed for bankruptcy. With the year 2023 already seeing moves being made to prosecute founder Sam Bankman-Fried and make creditors whole, the crypto exchange has made a move on the disgraced CEO’s parents in a new filing with the court.
FTX Wants Sam Bankman-Fried’s Parents
Sam Bankman-Fried’s trial is set for October 3 barring any postponements, meaning there is only two weeks left before the trial begins. However, FTX is still not backing down as it has now dragged SBF’s parents into the fray.
The parents of the exchange’s enigmatic founder, Allan Joseph Bankman and Barbara Fried, were named in a filing that was submitted to the United States Bankruptcy Court for The District of Delaware. The filing said that his parents, both of whom are law professors at Stanford Law School, abused their position of influence to fraudulently transfer and misappropriate funds from the crypto exchange while it was still in operation.
The filing points to millions of dollars being transferred to both parties who used the FTX enterprise “to enrich themselves, directly and indirectly, by millions of dollars, and knowingly at the expense of the debtors in these Chapter 11 Cases (the “Debtors) or the “FTX Group) and their creditors.
Furthermore, the filing pointed to the exchanges and its subsidiaries being run as a self-described “family business” despite being presented to the public as being otherwise. The older Bankman is said to have been “very involved in the business” as well as being an early investor in Alameda, the sister company of FTX Group.
The mother, Barbara Fried, was also said to be very involved in the business, often touting herself as a “partner in crime of the noncriminal sort” of her son, Sam Bankman-Fried. The pair were also said to continue to expand their influence and control in the company even as it headed toward insolvency.
SBF Parents Ignored The Obvious
In the slew of accusations being levied against Sam Bankman-Fried’s parents, the FTX filing alleges that both parents, given their background, knew about or ignored the red flags that showed that the executives at the exchange were carrying out a fraudulent scheme.
Both parents also allegedly continued to discuss and received a $10 million cash gift alongside a $16.4 million property in The Bahamas despite the company being on the edge of bankruptcy.
Additionally, SBF’s parents “also pushed for tens of millions of dollars in political and charitable contributions, including to Stanford University, which was seemingly designed to boost Bankman’s and Fried’s professional and social status at the expense of the FTX Group, and by extension, its customers and other creditors.”
Fried is also accused of encouraging straw donations from SBF and others in the company to help them avoid federal campaign finance rules. This way, they were able to conceal the fact that the donations actually came from the FTX Group. The FTX bankruptcy case, unfolding in the United States Bankruptcy Court for the District of Delaware, highlights how the state’s legal system remains at the center of major financial cases — from crypto scandals to Delaware sports betting regulatory disputes.
SBF’s trial starting in early October is expected to be one of the most famous cases of crypto fraud so far. The founder, while being held in custody, has been making demands of the court, most of which have been met with a no.
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