Creditors of the bankrupt cryptocurrency exchange FTX have taken legal action against the parents of FTX founder Sam "SBF" Bankman-Fried, alleging embezzlement of millions of dollars through their involvement in the exchange's operations.
On September 18, attorneys representing FTX creditors filed a lawsuit against SBF's parents, Joseph Bankman and Barbara Fried. They contend that Bankman and Fried used their influence within the FTX empire to enrich themselves at the expense of FTX's debtors during its bankruptcy.
The plaintiffs dispute SBF's claims that his parents were not closely involved in FTX's business. They argue that SBF's father, a professor at Stanford Law School, held a significant role within FTX Group, making crucial decisions. The debtors also allege that Bankman served as an executive on FTX Group's management team.
SBF's mother, another Stanford Law School professor, was active in FTX's political contributions. Fried was influential in directing FTX Group's political donations and encouraged substantial donations to the political action committee she co-founded, Mind the Gap (MTG), according to the complaint .
The complaint alleges that Bankman and Fried received substantial benefits from their involvement with FTX Group, including $10 million in cash gifts and a $16.4 million luxury property in the Bahamas. Bankman is further accused of misappropriating FTX Group funds for personal expenses, including private charter flights and luxury hotel accommodations.
The creditors are seeking accountability from Bankman and Fried for their actions and the recovery of assets for FTX's creditors. They argue that the defendants knowingly and willfully disregarded red flags indicating fraudulent activities that harmed debtors and creditors alike.
FTX, once a major cryptocurrency exchange, filed for Chapter 11 bankruptcy in November 2022. SBF, its founder and former CEO, has been arrested and charged with multiple counts, including fraud, money laundering, and bribery in connection with user funds from FTX and Alameda Research. SBF's first trial is scheduled to commence on October 3, focusing on seven charges related to fraudulent activities involving FTX and Alameda Research funds.
