FTX founder Sam Bankman-Fried’s parents are being sued for money they allegedly obtained inappropriately from the cryptocurrency company prior to its failure.
Managers at the bankrupt company claim in a complaint that the pair had millions of dollars that had been “fraudulently transferred” while turning a blind eye to wrongdoing at the business.
After the company’s failure, the lawsuit was brought on behalf of people who owed money.
When the business failed, Mr. Bankman-Fried was detained last year.
US authorities allege that the former millionaire, previously known as the “King of Crypto,” fraudulently transferred millions from the exchange to cover losses at his trading firm, give to politics, and purchase real estate.
He is in custody awaiting trial next month after contesting the allegations.
His parents’ lawyers claimed that the allegations against them were “completely false” and intended to harm their son’s chances of winning the case.
According to the lawsuit, which was filed as part of a larger bankruptcy case, Mr. Bankman-Fried’s parents, who were both Stanford University professors at the time, used their access to and influence within the FTX company to amass millions of dollars in direct and indirect wealth.
According to the complaint, FTX also offered them a $16.4 million property in the Bahamas along with a $10 million (£8 million) cash present from Alameda, a partner business of FTX.
FTX once ranked among the top cryptocurrency trading companies in the world, with estimated $15 billion in assets held as of 2021. It declared bankruptcy last year after a sudden rush of consumers trying to withdraw money exposed a significant hole in the business’s finances, estimated to be worth up to $8 billion.
It was allegedly exploited as a “piggy bank” by Mr. Bankman-Fried and other “insiders,” and his parents “helped perpetuate or benefited from this fraudulent largesse,” according to managers of the collapsed company.
According to the lawsuit, his father, Allan Joseph Bankman, a specialist in US tax law who advised FTX and played a significant part in maintaining the culture of false statements and flagrant mismanagement as well as helping to cover up claims that would have revealed the fraud.
Additionally, he assisted in resolving an internal 2019 complaint that alleged price manipulation.
While the lawsuit mentions texts in which Mr. Bankman complains about earning a $200,000 salary, contending that it should be $1m, he allegedly received accommodations at hotels costing $1,200 per night.
According to the lawsuit, Barbara Fried, Mr. Bankman-Fried’s mother, encouraged her son to conceal the source of his political donations while also assisting in their direction.
Managers for FTX are attempting to acquire money from the couple.
Mr. Bankman-Fried’s demise, one of the most prominent players in the field, sent ripples across the market and sparked regulatory attention.
