The parents of a man who founded a cryptocurrency exchange which later went bankrupt are being sued by the company, alleging the pair syphoned off millions of dollars from FTX’s funds to enrich themselves.
Allan Joseph Bankman and his wife Barbara Fried are accused of helping to set up a scheme where their son Sam Bankman-Fried gave them a $10m (£8m) “gift”.
And the couple used $16m (£13m) in FTX funds to buy a luxury home in the Bahamas, even as the firm teetered on the brink of collapse, it is claimed.
Bankman, a Stanford law professor and tax law expert, and Fried, a retired Stanford law professor, also pushed the exchange to make tens of millions of dollars in charitable contributions to their “pet causes” and the university, FTX said.
The company alleged Bankman-Fried ran it as a “family business” and misappropriated billions of dollars in customer funds to benefit a small circle of insiders, including his parents.
However, Bankman-Fried has insisted his parents “weren’t involved in any of the relevant parts” of the business.
FTX, which filed bankruptcy last November owing $8.7bn (£7bn) to its customers with Bankman-Fried resigning as chief executive, is trying to recover damages allegedly caused by the couple.
The lawsuit states: “Despite presenting itself to investors and the public as a sophisticated group of cryptocurrency exchanges and businesses, the FTX Group was a self-described ‘family business’.
“Bankman played a key role in perpetuating this culture of misrepresentations and gross mismanagement and helped cover up allegations that would have exposed the fraud committed by the FTX insiders.
“And together, Bankman and Fried syphoned millions of dollars out of the FTX Group for their own personal benefit and their chosen pet causes.”
Fried caused Bankman-Fried as well as other executives to contribute millions of dollars to a political action committee that she co-founded, according to FTX.
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Lawyers for the pair have denied the allegations saying they are completely false, adding: “This is a dangerous attempt to intimidate Joe and Barbara and undermine the jury process just days before their child’s trial begins.”
Bankman-Fried has pleaded not guilty to charges that he defrauded FTX customers by using their funds to prop up his own risky investments.
He is currently detained in jail ahead of a trial set to begin in New York on 3 October.
Other former FTX executives have pleaded guilty to criminal charges.
More than $7bn (£5.6bn) in assets has been recovered by FTX to repay customers, and it is trying to get back more with lawsuits against FTX insiders and other defendants.
Source : https://news.sky.com/story/sam-bankman-fried-parents-sued-by-bankrupt-crypto-exchange-ftx-over-misappropriated-funds-12965324