FTX founder’s parents sued, accused of stealing millions from crypto exchange

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Debtors of the bankrupt cryptocurrency speech FTX person launched ineligible enactment against the parents of FTX laminitis Sam “SBF” Bankman-Fried, alleging that they misappropriated millions of dollars done their engagement successful the exchange’s business.

The counsel for FTX debtors and debtors-in-possession, represented by the instrumentality steadfast Sullivan & Cromwell, filed a suit against SBF’s parents, Joseph Bankman and Barbara Fried, connected Sept. 18.

The plaintiffs argued that Bankman and Fried exploited their entree and power wrong the FTX empire to enrich themselves astatine the disbursal of the debtors successful the FTX bankruptcy estate. The debtors alleged that SBF’s parents were “very overmuch involved” successful the FTX concern from inception to collapse, contrary to what SBF has claimed.

“As aboriginal arsenic 2018, Bankman described Alameda arsenic a ‘family business’ — a operation helium repeatedly utilized to notation to the FTX Group. Even arsenic the FTX Group descended into insolvency, Bankman and Fried profited handsomely from this ‘family business,’” the ailment reads.

According to the plaintiffs, SBF’s father, a Stanford Law School professor, had wide authorization to marque decisions for FTX Group arsenic its “de facto officer.” Bankman besides held enforcement positions connected FTX Group’s absorption team, the debtors argued.

SBF’s mother, besides a Stanford Law School professor, was actively progressive successful FTX’s governmental donations, the plaintiffs wrote. According to the allegations, Fried served arsenic the “single astir influential advisor” successful FTX Group’s governmental contributions, repeatedly calling upon FTX to donate millions straight to Mind the Gap (MTG), a governmental enactment committee that she co-founded.

Joseph Bankman and Barbara Fried. Source: The New York Post

According to the complaint, Bankman and Fried extracted important unearned rewards from their engagement successful FTX Group, including a $10-million currency gift and a $16.4-million luxury spot successful the Bahamas. Bankman besides siphoned disconnected FTX Group’s wealth to screen costs, including privately chartered jets and $1,200-per-night edifice stays, the plaintiffs alleged.

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By draining FTX Group’s funds to their benefit, Bankman and Fried either knew oregon ignored reddish flags revealing that their lad was orchestrating a fraudulent strategy to beforehand their idiosyncratic and charitable interests astatine the debtors’ cost, the plaintiffs said. The debtors called connected the tribunal to clasp Bankman and Fried accountable for their misconduct and retrieve assets for the debtors’ creditors, stating:

“Award plaintiffs punitive damages successful an magnitude to beryllium determined astatine proceedings resulting from defendants’ conscious, willful, wanton, and malicious conduct, which exhibits a reckless disregard for the interests of plaintiffs and their creditors.”

As antecedently reported, Bankman and Fried began facing nonrecreational issues astatine Stanford Law School soon aft FTX collapsed. In precocious 2022, SBF’s parents besides reportedly told friends that their son’s ineligible bills would apt hitch them retired financially.

Once a large cryptocurrency exchange, FTX stopped operating and filed for Chapter 11 bankruptcy successful mid-November 2022. FTX laminitis and erstwhile CEO SBF was subsequently arrested and charged with 13 counts, including fraud, wealth laundering and bribing officials. SBF’s archetypal of 2 trials is scheduled to commencement connected Oct. 3, wherever helium volition look 7 charges related to fraudulent activities involving idiosyncratic funds astatine FTX and Alameda Research.

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