In court documents filed late Monday, the FTX bankruptcy estate sued the parents of founder Sam Bankman-Fried, seeking to recover millions of dollars it said were fraudulently transferred and misappropriated.
In the 63-page lawsuit, the estate claims that FTX describes itself as a “family-owned company” and that despite its appearance as a complex cryptocurrency exchange, “fraudulent conduct fueled its growth.” Bankman-Fried’s father, Allan Joseph Bankman, is a top tax law professor at Stanford Law School who the lawsuit says “perpetuated this culture of misrepresentation and heavy-handed management.” and played a key role in covering up potentially exposed allegations. Fraud.
The lawsuit also claims that Bankman-Fried’s parents “siphoned off millions of dollars” from the cryptocurrency empire for “their own personal gain,” and the estate is now seeking to recoup those funds as part of its bankruptcy part of the program.
The bankruptcy estate, led by former Enron steward Jon Ray III, is seeking to recover hundreds of millions of dollars paid to politicians, businesses and former members of FTX’s inner circle following FTX’s collapse last November.
The lawsuits tend to be scathing dissections of problems with the Bankman-Fried case, such as one filed in July against an entity called FTX Europe, which argued that the exchange had paid nearly $4 million for a regulatory license worth $2 million. One hundred million U.S. dollars. In a separate lawsuit in July, the estate laid out details of mismanagement by former executives and family members, including that Bankman-Fried’s brother had inquired about using FTX funds to buy the island nation of Nauru. Build a charitable community and prepare for the end of the world.
The latest lawsuit is high-profile for its targets: Bankman-Fried’s parents are both longtime academics at a top university; Barbara Fried is a distinguished professor of philosophy at Stanford University, and Kerman is a tenured professor at the law school.
Spokespeople for Bankman and Fried did not immediately respond to requests for comment.
“The proverbial adult in the room”
The lawsuit confirms the details disclosed recent reports About Bankman-Fried’s parents, including a feature last week Bloomberg Businessweek, they played a key role in the rise of FTX. The suit alleges that Bankman supported the exchange’s growth, including “proudly” promoting his status as an early investor in trading company Alameda and advising his son on corporate and tax matters. He also officially serves as a senior advisor to the FTX Foundation and serves as “actually officers, directors and/or managers of the wider corporation”.
“Bankman portrayed himself as the proverbial adult in the room,” FTX Properties argued. Rather than sounding the alarm about wrongdoing, he “remained silent” and actively worked to suppress efforts to “expose the fraud.”
While Fried played a less active role, the lawsuit says she described herself as her son’s “non-criminal partner in crime” and served as the most influential adviser in his political donation campaign – which was targeted at him A key part of a criminal case. Corman-Fried and other FTX executives.
The FTX estate argued that Bankman and Fried either knew “or ignored” “red flags” that suggested their sons were orchestrating a “massive fraud scheme.” In addition, they allegedly made a fortune along the way, including cash gifts worth $10 million and a mansion in the Bahamas worth $16.4 million. Bankman also arranged for himself a $1,200-a-night hotel room and arranged airfare and tickets to the French Formula One Grand Prix for a Stanford Law School student who was later hired by FTX as an outside consultant.
Bankman also arranged for himself an annual salary of US$1 million, but complained that he only received about US$17,000 per month. “Gee, Sam, I don’t know what to say,” Bankman wrote in an email to his son, adding that he planned to involve Bankman-Fried’s mother.
Not all so-called benefits are financial. According to the lawsuit, Bankman guest-starred in a 2022 FTX Super Bowl commercial with comedian Larry David at his request.
“I’m not a big celebrity fan and I don’t care much about meeting Tom Brady,” Bankman said, according to the lawsuit. “But Larry David…”
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