FTX Exchange Seeks to Reclaim Funds and Property from Bankrupt Ex-CEO’s Parents
The bankrupt cryptocurrency exchange FTX is taking legal action to recover luxury property and “fraudulently transferred and misappropriated funds” from the parents of Sam Bankman-Fried, the disgraced former CEO and founder of the exchange.
In a court filing on Monday, lawyers representing the bankruptcy estate of FTX alleged that Allan Joseph Bankman and Barbara Fried used their influence within the company to enrich themselves by millions of dollars. The lawsuit, filed in the U.S. Bankruptcy Court for the District of Delaware, claims that Bankman and Fried discussed transferring a $10 million cash gift and a $16.4 million luxury property in the Bahamas with their son.
The suit also accuses Sam’s father of participating in efforts to cover up a whistleblower complaint that could expose FTX as fraudulent. Emails written by Bankman reveal his dissatisfaction with his salary, which he believed should be $1 million per year. The correspondence characterizes Bankman lobbying his son to increase his own salary. Within weeks, Bankman-Fried gifted his parents $10 million, followed by deeding them the $16.4 million property in the Bahamas.
Allegations of Political Contributions and Violating Campaign Finance Rules
According to the court filing, Bankman-Fried’s parents pushed for tens of millions of dollars in political and charitable contributions to enhance their professional and social status. Fried is also accused of encouraging her son and others within the company to violate federal campaign finance disclosure rules by concealing FTX as the source of contributions.
Bankman-Fried’s parents are both legal scholars who previously taught at Stanford Law School. The former FTX CEO himself faces wire and securities fraud charges related to the alleged multibillion-dollar FTX fraud, which federal prosecutors and regulators consider one of the largest financial frauds in American history.
FTX Seeks Compensatory Relief and Return of Property
FTX’s new leadership team has been working to recover billions of dollars in missing assets. The exchange’s lawsuit against Bankman-Fried’s parents seeks compensatory relief, including punitive damages for their alleged malicious conduct, as well as the return of any property or payments received from FTX.
If the judge rules in favor of the bankrupt exchange, it remains uncertain how these clawbacks will impact Bankman and Fried’s ability to pay for their son’s legal fees as his trial begins next month.
Hot Take: FTX Pursues Legal Action Against Parents of Ex-CEO
Bankrupt crypto exchange FTX is fighting to reclaim funds and luxury property from the parents of its former CEO and founder. The lawsuit alleges that the parents exploited their influence within the company to enrich themselves by millions of dollars. Furthermore, it claims that they were aware or ignored FTX’s insolvency while discussing significant cash gifts and a luxury property transfer with their son. The court filing also accuses Sam’s father of participating in covering up a whistleblower complaint. Additionally, Bankman lobbied his son to increase his own salary, resulting in substantial gifts from Bankman-Fried to his parents. FTX seeks compensatory relief and the return of any property or payments made to the couple.
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