A lawsuit has been filed against the parents of Sam Bankman-Fried, the founder of FTX, for money that they allegedly acquired fraudulently from the cryptocurrency firm prior to its failure.
The management of the insolvent company accuse the pair, in a file, of retaining millions of dollars that were “fraudulently transferred” and of turning a blind eye to malfeasance within the company. The allegations come from the complaint.
Following the failure of the company, the lawsuit was brought on behalf of those who were owed money.
Mr. Bankman-Fried was taken into custody a year ago as a direct result of the decline of the company.
US authorities have charged a former millionaire who was formerly known as the “King of Crypto” of unlawfully transferring millions of dollars from an exchange in order to buy property, make political donations, and plug losses at his trading firm.
He has maintained his innocence despite being detained in preparation for his trial the following month.
The charges that were made against his parents, according to their attorneys, were “completely false” and were made with the intention of harming their son’s chances of winning the case.
The court action, which was brought as part of a larger bankruptcy claim, alleges that Mr. Bankman-Fried’s parents took advantage of their “access and influence within the FTX enterprise to enrich themselves, directly and indirectly, by millions of dollars.” At the time, both of Mr. Bankman-Fried’s parents were professors at Stanford University.
According to the statement, they were given a financial gift of $10 million (£8 million) from assets that belonged to Alameda, a partner firm of FTX. In addition, FTX provided them with a property in the Bahamas valued at $16.4 million.
Once upon a time, FTX was one of the largest cryptocurrency trading companies in the world, holding assets that were predicted to be worth $15 billion in the year 2021. A rapid rush by customers to withdraw funds showed a massive imbalance in the company’s finances that was apparently worth up to $8 billion, which led to the company’s decision to file for bankruptcy the previous year.
The administrators of the bankrupt company claim that it was exploited as a “piggy bank” by Mr. Bankman-Fried and other “insiders” and that his parents “helped perpetuate or benefited from this fraudulent largesse.”
According to the lawsuit, his father, Allan Joseph Bankman, is a tax law specialist in the United States. During his time as an adviser to FTX, he “played a key role in perpetuating this culture of misrepresentations and gross mismanagement and helped cover up allegations that would have helped expose the fraud.”
According to the report, he was also instrumental in the suppression of an internal complaint lodged in 2019 alleging price manipulation.
The lawsuit mentions communications in which Mr. Bankman complains about having a $200,000 income, stating that it is intended to be $1 million. At the same time, the lawsuit states that he was supposedly given free accommodations at hotels charging $1,200 per night.
According to the complaint, Mr. Bankman-Fried’s mother, Barbara Fried, was involved in helping to direct her son’s political donations and encouraged him to conceal the source of those donations.
The pair owes money to FTX, and the company’s managers are trying to get it back from them.
The downfall of one of the most prominent actors in the industry, Mr. Bankman-Fried, sent shudders across the industry and served to galvanize regulatory investigation.