Beleaguered cryptocurrency exchange FTX has filed suit against the parents of Sam Bankman-Fried (SBF). According to the lawsuit, Allan Joseph Bankman and Barbara Fried fraudulently received funds from FTX through their son.
Creditors of FTX and Alameda Research intend to recover millions of dollars in these transfers. The indictment says the funds were misappropriated by SBF’s parents during FTX’s early years.
Earlier this year, the exchange’s lawyers accused SBF of financing its defense with part of that money. However, FTX’s lawyers did not reveal the amount they intend to recover.
Millions of SBF parents
According to a court filing filed on Monday (18), FTX Trading claims that Allan Bankman and Barbara Fried made direct and indirect transfers from FTX and affiliated companies. This money ended up in the couple’s personal accounts, with the help of SBF.
“SBF’s parents exploited their access and influence within the FTX company to enrich themselves, directly and indirectly, by millions of dollars, and knowingly at the expense of the debtors in these Chapter 11 cases and their creditors,” the lawsuit says.
According to lawyers, Grupo FTX was in fact a “family company” that called itself a company, but was managed to benefit a group of people. Allan Bankman acted as a consultant and played a key role in perpetuating a “culture of misrepresentations and gross mismanagement”.
Lawyers also claim that SBF’s father even helped cover up accusations against the company and its employees. Furthermore, the couple embezzled millions of money from the FTX Group for their own personal benefit. Therefore, the company’s lawyers ask the court to hold them both responsible for their misconduct and also ask for the embezzled money to be returned.
FTX targeted Allan Bankman and Barbara Fried on 12 counts, including fraud, aiding and abetting breaches of fiduciary duties. Furthermore, the debtors presented sufficient evidence of fraudulent transfers for personal benefits, political donations and protection of their inmates.
Former CEO awaits trial
At the beginning of the FTX case, SBF’s parents paid a bail of US$250 million, one of the largest in the history of the United States, to free their son. For months, SBF was under house arrest in his parents’ house awaiting trial and with restricted access to the Internet and other services.
However, the new accusation sheds light precisely on the bail money, which FTX alleges was embezzled. SBF has been imprisoned in a New York penitentiary since August, after trying to contact witnesses and compromising the trial. Now, the first hearing is scheduled for October 2nd.
SBF tried to pay bail again and await trial in freedom, but the judge denied his lawyers’ request. He will remain in his cell, where he does not have a vegan diet and has lost his legal privileges. The trial will be crucial for SBF and the future of FTX and its creditors.