Lawyers for FTX Trading have filed a lawsuit accusing the parents of its founder Sam Bankman-Fried of using their influence over their son to syphon millions of dollars from the company. The complaint, filed in the bankruptcy case in Delaware, alleges that Allan Joseph Bankman and Barbara Fried spent lavishly on a luxury home in the Bahamas and funneled contributions to their “pet causes” and Stanford University, while also benefiting from more than $30 million in FTX funds. The lawsuit claims that the couple’s actions led to the collapse of FTX and resulted in both criminal and civil investigations. Sam Bankman-Fried has pleaded not guilty to charges that he cheated investors and looted customer deposits to make lavish real estate purchases, campaign contributions to politicians, and risky trades at Alameda Research, his cryptocurrency hedge fund trading firm.
According to the lawsuit, Bankman, a Stanford University law professor and expert in tax law, and Fried, a retired Stanford law professor, participated in the wrongdoing that led to the collapse of FTX. The complaint alleges that Bankman and Fried helped cover up allegations that would have exposed the fraud committed by FTX insiders and syphoned millions of dollars out of the company for their own personal benefit and their chosen pet causes. The lawsuit also accuses Bankman of playing a key role in perpetuating a culture of misrepresentations and gross mismanagement within the company.
Sam Bankman-Fried (Via Sam Bankman-Fried/Twitter)
The complaint also details a scheme in which Sam Bankman-Fried gave his parents a nontaxable “gift” of $10 million, which was actually a loan from Alameda, and alleges that the couple used FTX funds to purchase a 30,000-square-foot luxury residence in the Bahamas and to furnish and maintain the property. Additionally, the lawsuit claims that Bankman directed more than $5.5 million in charitable contributions from FTX to Stanford University, which the complaint describes as “naked self-dealing” in an attempt to “curry favor with and enrich his employer at the FTX Group’s expense.”
The lawsuit also accuses Fried of encouraging her son and other FTX insiders to make unlawful political contributions, including to a political action committee she co-founded. Former FTX engineering chief Nishad Singh, who pleaded guilty to charges including conspiracy to make unlawful political contributions and to defraud the Federal Election Commission, was allegedly used as a conduit to make these contributions. The lawsuit claims that the political contributions were made to recipients who were “hand-selected by Fried and rubber-stamped by Bankman-Fried.”
