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Former SEC Official Urges Criminal Charges Against Sam Bankman-Fried Parents

2 mins
Updated by Bary Rahma
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In Brief

  • Former SEC official John Reed Stark is urging federal agencies to consider criminal charges against the parents of Sam Bankman-Fried (SBF).
  • Stark has expressed surprise that SBF's parents have not been named as defendants in the ongoing legal actions.
  • Stark also called on the Department of Justice to take a more active role in pursuing criminal proceedings related to cryptocurrencies
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John Reed Stark, the former head of the US Securities and Exchange Commission (SEC) Office of Internet Enforcement, is calling on federal agencies, including the Department of Justice (DOJ), to bring criminal charges against the parents of former FTX CEO Sam Bankman-Fried.

Stark expressed surprise that the authorities did not include Bankman-Fried’s parents as defendants in their legal actions.

Sam Bankman-Fried Parents Could Be Named ‘Relief Defendants’

John Reed Stark suggested Bankman-Fried parents as individuals who might have benefited from the alleged wrongdoings of their son. He said the SEC should have brought them into the lawsuit, possibly as relief defendants.

Relief defendants are typically not accused of wrongdoing but may hold assets acquired through illicit means.

“I cannot comprehend why the U.S. Department of Justice and the U.S. Securities and Exchange Commission have not added SBF’s parents as defendants. For the SEC, SBF’s parents should at least be named as relief defendants,” Stark said.

Bankman-Fried is the child of Allan Bankman and Barbara Fried. Allan Bankman is a Stanford law professor, while Barbara Fried is a professor emerita at the same law school.

Last week, FTX initiated clawback actions against Bankman-Fried’s parents. The bankrupt exchange alleges they manipulated their relationship to enrich themselves and are looking to recover their gains.

Stark also called on the DOJ to initiate criminal proceedings related to crypto. He highlighted that the agency has remained silent on crypto-related prosecutions, even though the SEC has initiated several enforcement actions.

According to him, the DOJ’s inaction is “mind-boggling,” which has allowed certain cryptocurrency stakeholders to downplay the significance of SEC enforcement actions. He cited examples such as Tyler Winklevoss of Gemini, who likened SEC allegations to “manufactured parking tickets,” and major crypto companies like Coinbase and Binance, which have seemingly embraced their SEC lawsuits as a mark of distinction.

Stark stated that to change this situation, the DOJ must support the SEC and show that it will impose serious consequences, including the possibility of prison time, for crypto-related offenses.

“Until crypto-grifters face the threat of DOJ prosecution (i.e. prison time), they will continue to treat SEC enforcement-related risks (like injunctions, penalties and disgorgement) as the cost of regulatory arbitrage and just another liability item on their balance sheets. Wake up US DOJ, we need you buddy,” Stark concluded

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Oluwapelumi Adejumo
Oluwapelumi believes Bitcoin and blockchain technology have the potential to change the world for the better. He is an avid reader and began writing about crypto in 2020.
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