Barbara Fried and Joe Bankman allegedly used their “access and influence within the FTX enterprise to enrich themselves” by misappropriating customer funds.
Failed crypto exchange giant FTX has filed a lawsuit against the parents of its co-founder Sam Bankman-Fried, accusing them of misappropriating millions of dollars worth of funds from the now-bankrupt company for their personal use and benefit.
The 63-page lawsuit filed in federal court Monday accuses Barbara Fried and Joe Bankman of using their “access and influence within the FTX enterprise to enrich themselves” through misappropriated customer funds.
The suit comes just days before Bankman-Fried’s criminal trial is set to begin over allegations that he defrauded FTX customers and lenders, leading to the company’s stunning collapse last year. The company, under a new CEO, has since been working to recover the billions of dollars lost in customers’ funds.
Attorneys for Bankman-Fried’s parents said in a joint statement shared with HuffPost on Tuesday that the lawsuit against them is “completely false” and a waste of FTX’s money.
“This is a dangerous attempt to intimidate Joe and Barbara and undermine the jury process just days before their child’s trial begins,” said attorneys Sean Hecker and Michael Tremonte.
According to the lawsuit, Fried and Bankman were considered part of the “family business” by their son, who is now 31, and “either knew — or ignored bright red flags revealing — that their son, Bankman-Fried, and other FTX Insiders were orchestrating a vast fraudulent scheme to profit and promote their personal and charitable agendas at the Debtors’ expense.”
In addition to allegedly turning a blind eye to fraud among them, they’re accused of accepting a $10 million cash gift and a $16.4 million luxury property in the Bahamas from FTX, “despite knowing or blatantly ignoring that the FTX Group was insolvent or on the brink of insolvency.”
They also allegedly pushed for tens of millions of dollars in FTX money to be dished out in political and charitable contributions of their choosing, including to Stanford University, where they are both employed, according to the lawsuit.
On top of their alleged financial gifts, trips and real estate perks, the suit alleges that Bankman also complained in an email to his son, which he said he would CC his wife on, that his $200,000 annual salary from FTX was too paltry and he should be receiving $1 million.
“Gee, Sam I don’t know what to say here. This is the first [I] have heard of the 200K a year salary! Putting Barbara on this,” a copy of the email cited in the suit states.
Sam Bankman-Fried has pleaded not guilty to charges related to money laundering, campaign finance offenses and various types of fraud. His trial is scheduled to start on Oct. 3.
See the full lawsuit here:gov.uscourts.deb.188450.2642.0
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