FTX Sues Sam Bankman-Fried’s Parents

Bankrupt crypto exchange FTX is looking to claw back luxury property and “millions of dollars in fraudulently transferred and misappropriated funds” from the parents of Sam Bankman-Fried, the exchange’s disgraced ex-CEO and founder. CNBC reports: In a Monday court filing, lawyers representing the bankruptcy estate of the failed exchange alleged that Allan Joseph Bankman and his wife, Barbara Fried, “exploited their access and influence within the FTX enterprise to enrich themselves, directly and indirectly, by millions of dollars.” The lawsuit, which was filed in the U.S. Bankruptcy Court for the District of Delaware, goes on to claim that “despite knowing or blatantly ignoring that the FTX Group was insolvent or on the brink of insolvency,” Bankman and Fried discussed with their son the transfer of a $10 million cash gift and a $16.4 million luxury property in The Bahamas.

The suit alleges that as early as 2019, Sam’s father also directly participated in efforts to cover up a whistleblower complaint which threatened to “expose the FTX Group as a house of cards.” The filing also details emails written by Bankman in which he complained to the FTX US Head of Administration that his annual salary was $200,000, when he was “supposed to be getting $1M/yr.” That grievance was ultimately elevated to his son in an email, according to the lawsuit: “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.”

The filing characterizes the correspondence as Bankman lobbying his son to “massively increase his own salary.” Within two weeks, the suit claims that Bankman-Fried had collectively gifted his parents $10 million in funds coming from Alameda, and within three months, the couple was deeded the $16.4 million property in The Bahamas. According to the partially-redacted filing, Bankman-Fried’s parents also “pushed for tens of millions of dollars in political and charitable contributions, including to Stanford University, which were seemingly designed to boost Bankman’s and Fried’s professional and social status.” Fried is also accused of encouraging her son and others within the company to avoid, if not violate, federal campaign finance disclosure rules by “engaging in straw donations or otherwise concealing the FTX Group as the source of the contributions.”