The parents of disgraced FTX founder Sam Bankman-Fried are facing explosive new allegations that they improperly enriched themselves by siphoning off millions of dollars in “fraudulently transferred and misappropriated funds” from their son’s now collapsed cryptocurrency exchange empire.
In a late night court filing, lawyers for the FTX debtors directly accused tenured Stanford Law professors Joseph Bankman and Barbara Fried of leveraging their influence to funnel significant sums of money from FTX to benefit their own pet charitable causes and lavish lifestyles.
Specifically, Bankman, a renowned tax law professor, allegedly took advantage of his position to gift extravagant treats like flights and tickets to the Formula One Grand Prix in France to his inner circle of friends and family – all illicitly funded by FTX’s coffers.
Meanwhile, Fried is alleged to have obtained millions of dollars in donations from Bankman-Fried and his associates to flow to Mind the Gap, a Democratic super PAC she co-founded, in order to influence the outcome of the 2020 US elections. The debtors claim she further pressured FTX insiders to skirt if not outright violate federal campaign finance disclosure laws in the process.
This contradicts Bankman-Fried’s previous assertions that his parents “weren’t involved in any of the relevant parts” of the FTX enterprise. But debtors lawyers assert the reality is that the parents were intimately involved at the highest levels in both founding and operating FTX from start to dramatic collapse.
As evidence, they point to a 2018 comment from Bankman referring to FTX’s shadowy hedge fund Alameda as a “family business”, a phrase he allegedly used repeatedly showing the deep family ties. Even as FTX began rapidly imploding, Bankman-Fried was supposedly still discussing transfering his parents a $10 million cash gift and $16.4 million luxury Bahamas property.
In response, lawyers for the parents vehemently maintained the allegations are both “dangerous” and “completely false.” However, the claims threaten to further entangle the parents in the FTX debacle right before their son’s criminal trial begins, where he faces charges over the multibillion dollar collapse.
While not charged yet themselves, the FTX debtors alleged the parents either knowingly participated in, or at minimum deliberately ignored obvious red flags of, the massive fraud scheme engineered by their son and his inner circle of executives. The lawsuit marks the latest attempt to untangle the web of questionable money flows tied to the FTX implosion
