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FTX Sues SBF’s Parents For Recovery of Misappropriated Millions

2 mins
Updated by Kyle Baird
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In Brief

  • FTX debtors have initiated legal proceedings against the parents of FTX Founder, Samuel Bankman-Fried.
  • The lawsuit alleges Joseph and Barbara Bankman-Fried exploited their access to FTX to enrich themselves.
  • The FTX debtors intend to recover millions in fraudulently transferred and misappropriated funds from SBF's parents.
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The FTX Debtors have initiated legal proceedings against the parents of the disgraced FTX founder, Sam Bankman-Fried (SBF), to recover funds allegedly fraudulently transferred and misappropriated.

The filing stated,

“Bankman-Fried’s parents, Bankman and Fried exploited their access and influence within the FTX enterprise to enrich themselves.”

SBF’s Parents Accused of Exploiting Position Within FTX

A court filing dated September 18 reveals that the FTX debtors have commenced legal action against SBF’s parents. The debtors intend to reclaim substantial sums of money.

“This action seeks to recover millions of dollars in fraudulently transferred and misappropriated funds from the parents of FTX Founder Samuel Bankman-Fried.”

The court document refers to SBF’s mother as “Fried,” and Allan Joseph Bankman as “Bankman.”

According to the filing, Bankman and Fried purposefully exploited their access to the defunct crypto exchange for their gain. It contends that it came to the detriment of the debtors involved in these Chapter 11 Cases.

FTX Collapse Explained: How Sam Bankman-Fried’s Empire Fell

Bankman allegedly leveraged his extensive background as a tax law expert and Stanford law professor to secure a prominent role at FTX.

The document elaborates that Bankman initially began as a pro-bono contributor within the organization. However, he gradually assumed the responsibilities of a “de facto” officer, strategically advising and overseeing FTX operations.

Bankman reportedly earned the trust of staff across the entities due to the significant experience gap that existed between him and the other staff members:

“Bankman portrayed himself as the proverbial adult in the room—and was uniquely positioned to fulfill that role—as he worked alongside inexperienced fellow executive officers, directors, and managers responsible for safeguarding billions of dollars.”

SBF Encounters Hurdles Ahead of Trial Date

The debtors claim that Bankman received substantial compensation for his services at FTX. This compensation allegedly included property, private chartered jet tickets, and luxurious hotel accommodations.

It further cited a commercial acting opportunity alongside Larry David, the writer of Seinfeld.

The court has scheduled the highly publicized fraud trial for SBF on October 3. However, SBF has continuously engaged in legal disputes with prosecutors as his court demands have been consistently denied.

On September 17, BeInCrypto reported that US prosecutors have objected to SBF’s proposed voir dire process. They claim that the questions he has suggested for determining jury selection are excessive and will take up too much time.

SBF wanted to ask people how closely they’ve been following the case and what they think because of media reports. However, US prosecutors want the court to ask more neutral questions.

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Ciaran Lyons
Ciaran is a cryptocurrency journalist based in Sydney, Australia. He particularly enjoys writing about CBDC developments and the practical implementations of cryptocurrency in real-world scenarios. He has also appeared across major television networks in Australia including Channel Ten, Channel Nine and SBS TV. Prior to his foray into cryptocurrency, Ciaran worked as a presenter on national radio station Triple J.
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