Bankrupt cryptocurrency exchange FTX has initiated legal action against Joseph Bankman and Barbara Fried, the parents of its founder and former CEO, Sam Bankman-Fried. In a Monday court filing, the company seeks to recover “millions of dollars in fraudulently transferred and misappropriated funds.”
The court filing, with certain sections redacted, requests that the court to award damages to the FTX estate, retrieve any property or payments previously granted to the parents by FTX and impose punitive damages as a result of “conscious, willful, wanton, and malicious conduct.”
As an example, the filing revealed that FTX Trading paid approximately $18,914,327.82, including taxes, fees, and expenses, for Blue Water, a company owned by Bankman and Fried.
It also alleges that Bankman, with his knowledge of tax law and understanding of FTX Group’s complex corporate structure, facilitated a cash gift of $10 million to himself and Fried from Alameda Ltd. funds.
The filing accuses Bankman and Fried, both accomplished law professors at Stanford Law School, of exploiting their legal expertise and veneer of respectability for personal gain, rather than serving the interests of FTX Group.
It further asserts that Bankman should have been aware of FTX Group’s precarious financial situation, even as he engaged in activities such as appearing in a Super Bowl commercial and withdrawing millions from the company.
The filing also implicates Bankman in helping other FTX insiders divert funds toward donations and covering up a whistleblower complaint dating back to September 2019.
In response, the attorneys representing Joseph Bankman and Barbara Fried issued a joint statement, describing the lawsuit as a baseless attempt to intimidate the parents before their child’s trial and refuting the allegations.
