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FTX Bankruptcy Lawyers Pursue SBF Family in the Hunt For More Assets

2 mins
Updated by Ryan James
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In Brief

  • Lawyers representing FTX want Sam Bankman-Fried's family to testify under oath in the bankruptcy case.
  • The lawyers are eyeing real estate in the family's name, allegedly purchased through misappropriated customer funds.
  • Sam Bankman-Fried's parents have reportedly been trying to return the title deeds to a $16 million Bahamas property since at least Dec. 2022.
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FTX’s bankruptcy lawyers have asked Judge John Dorsey for permission to subpoena family members of Sam Bankman-Fried to testify under oath regarding any financial benefits accrued from FTX’s business. 

FTX also wants to question several former executives to unearth any assets that can be used to repay bereft creditors of the bankrupt exchange

FTX Lawyers Continue Aggressive Pursuit of Assets

According to Bloomberg, Bankman-Fried’s father and law professor Joseph Bankman offered tax advice to FTX employees, while Bankman-Fried’s brother Gabriel engaged in political lobbying from a plush property in Washington D.C.

Bankman’s wife, Barbara Fried, allegedly received funds from FTX for a Mind the Gap political action committee. Fried also spent a nontrivial amount supporting mostly democratic candidates in 2022.

The lawyers continue their aggressive pursuit of outstanding FTX assets, despite recently discovering about $5 billion to compensate users. Additionally, its new CEO, John J. Ray III, said a new task force was investigating the feasibility of reopening the exchange’s doors to obtain the necessary liquidity to reimburse customers. 

Brothers Lobbied Heavily for Pandemic Prevention

The younger sibling of Sam Bankman-Fried, Gabriel is the former director of a non-profit and political action committee dedicated to pandemic prevention. 

The brothers’ involvement in the initiative expressed their commitment to a philosophy called effective altruism. Using FTX cash, they made eclectic investments, including donating $12 million to a California ballot initiative geared towards detecting emerging viruses and funding the political campaign of a biosecurity expert from Oregon. 

All told, their political action committee, Protect Our Future, spent $28 million on Democrats in 2022. The non-profit Guarding Against Pandemics used $1 million to fund lobbying efforts for a new pandemic plan on Capitol Hill. 

After the collapse of FTX in Nov. 2022, Gabriel Bankman-Fried resigned from his position at the Guarding Against Pandemics. One of the brother’s advisers said he was convinced that the younger Bankman-Fried had a genuine interest in pandemic prevention but wasn’t sure about Sam.

“I’m 100 percent sure Gabe cared about pandemics … I don’t know what to think about [Sam],” he told the Washington Post.

More about assets than biological ties

The application to subpoena the family is less about their biological relationships with Sam Bankman-Fried than it is about their use of assets obtained through the alleged defrauding of FTX customers.

Lawyers allege that Bankman-Fried’s parents lived in a $16.4 million Bahamian mansion, despite knowing that the property belonged to FTX. They also allege that Gabriel used fraudulent funds to buy a luxurious property in Washington D.C. In Dec. 2022, a spokesperson for the parents said they were in the process of returning the title deeds for the property.

Joseph Bankman-Fried has hired a lawyer for the separate criminal case against his elder son rather than the FTX bankruptcy case. His lawyer is reportedly in negotiations with FTX lawyers.

Pending a voluntary resolution, Judge Dorsey must approve any request by FTX lawyers to subpoena Sam Bankman-Fried’s family.

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David Thomas
David Thomas graduated from the University of Kwa-Zulu Natal in Durban, South Africa, with an Honors degree in electronic engineering. He worked as an engineer for eight years, developing software for industrial processes at South African automation specialist Autotronix (Pty) Ltd., mining control systems for AngloGold Ashanti, and consumer products at Inhep Digital Security, a domestic security company wholly owned by Swedish conglomerate Assa Abloy. He has experience writing software in C,...