FTX Bankruptcy Estate Sues Sam Bankman-Fried’s Parents, Joseph and Barbara, to Claw Back ‘Misappropriated Funds’

Bankrupt crypto exchange FTX has sued founder and former CEO Sam Bankman-Fried’s parents, Joseph Bankman and Barbara Fried, to “recover millions of dollars in fraudulently transferred and misappropriated funds,” the company said in a Monday court filing.

The filing, redacted in parts, asks the court to award the FTX estate damages, the return of any property given or payment made to the parents by FTX in the past, and punitive damages resulting from “conscious, willful, wanton, and malicious conduct.”

“FTX Trading paid $18,914,327.82, inclusive of taxes, fees, and costs, for Blue Water, to which Bankman and Fried received title, as well as various expenses related to Blue Water totaling more than $90,000,” the filing said, as one example. The filing also alleged that “Bankman’s command of tax law and unique understanding of the FTX Group’s muddled corporate structure allowed him to facilitate the transfer of a cash gift totaling $10 million to himself and Fried consisting of Alameda Ltd. funds.”

“Bankman and Fried deployed their decades of experience as sophisticated law professors and veneer of legitimacy not to help the FTX Group, but rather to plunder it in order to enrich themselves and their pet causes,” the filing alleged.

“[Bankman] thus knew, or should have known, the perilous financial state of the FTX Group, even as he moonlighted as an actor in a Super Bowl commercial and extracted millions of dollars from the FTX Group,” the filing said.

Both Bankman and Fried are professors at Stanford Law School. The complaint further alleges that Bankman helped other FTX insiders dissipate FTX group funds on donations and helped cover up a whistleblower complaint from September 2019.

Barbara Fried was the “point person” for SBF’s political contribution strategy, the filing said. Additionally, she used her “access and influence to benefit MTG [Mind the Gap], an independent expenditure-only political action committee that she co-founded in 2018 and for which she served as President and Chair.”

The filing alleges “tens of millions of dollars” were contributed to MTG or MTG-supported causes at Barbara Fried’s explicit request.

The total amount Bankman and Fried may have misappropriated was not included in the filing, though it provided certain line items. FTX alleged that either or both of them may have expensed $1,200-per-night hotel stays, plane tickets and salaries. Bankman received an annual salary of $200,000 for his role as a senior adviser to the FTX foundation, more than $18 million for the property in the Bahamas and $5.5 million in FTX Group donations to Stanford University.

Additionally, the filing alleges that Bankman was part of the small group that attempted a last-ditch effort to sell FTX to Binance.

“Bankman was included in the small group that received the Binance Letter of Intent and a calendar invitation for a meeting with Binance scheduled for November 9, 2022. On November 10, 2022, the day before the Chapter 11 filing, Bankman was scheduled to meet with The Bahamas Prime Minister,” the filing said.

Sam Bankman-Fried is preparing for a trial next month from behind bars. Spokespeople for Bankman and Fried could not be immediately reached for comment.

UPDATE (Sept. 19, 2023, 05: 25 UTC): Adds additional details.

Edited by Nikhilesh De.

Source Article