- FTX has filed a lawsuit accusing Sam Bankman-Fried’s parents of using their influence to enrich themselves financially
- Joe Bankman, in particular, is accused of being heavily involved in aiding the fraud that went on at FTX
- Lawyers for the pair have strongly denied the claims, setting the stage for a contentious legal battle
The parents of former FTX CEO Sam Bankman-Fried have become caught up in the collapse of the exchange after the company filed a lawsuit against the pair. Joe Bankman and Barbara Fried, both long-serving law professors at Stanford University, have been accused of leveraging their influence within the FTX enterprise to enrich themselves financially, leading to the bankrupt company seeking to recover millions of dollars received from their son.
Joe Bankman in It up to His Neck, Say Prosecutors
According to the complaint filed yesterday, Bankman and Fried received a $10 million cash gift from their son and a $16.4 million Bahamas home, purchased by the exchange and located where FTX had its headquarters. The lawsuit further claims that Bankman aided in concealing complaints made by a former lawyer for his son’s business. Fried is accused of coaching her son and another FTX executive on evading disclosure requirements for political donations.
Joe Bankman is also accused of facilitating hundreds of millions of dollars in loans to top FTX employees and was listed as a member of the firm’s management team. The lawsuit cites messages where he expressed dissatisfaction with his $200,000 annual salary compared to an expected $1 million. Bankman also allegedly billed FTX for private jet travel and $1,200-per-night hotel stays, even making a cameo appearance alongside comedian Larry David in an FTX commercial during the 2022 Super Bowl.
Scrutiny Seems Warranted
Barbara Fried, like her husband a respected scholar, operated a political donor network financed in part by her son. While she never worked for FTX directly, the lawsuit asserts her involvement in her son’s activities, particularly advising on political donations, including encouraging “straw donations” to conceal FTX as the source of funds. Federal prosecutors have previously accused Sam Bankman-Fried of orchestrating a straw donation scheme, leading to guilty pleas from two top advisers.
The lawsuit further reveals the couple’s connection to a luxurious Bahamas property, frequented by them. Despite later disavowing ownership, a subsidiary of FTX appears to have paid for the property and covered the fees for their Bahamas permanent residency applications. Furthermore, Joe Bankman requested that FTX employees facilitate billing for landscaping services at the property, while Barbara Fried instructed them to place orders for high-end furniture and decor items for the house.
In summary, the lawsuit contends that the couple “either knew — or ignored bright red flags revealing — that their son, Bankman-Fried, and other FTX insiders were orchestrating a vast fraudulent scheme.”
Couple Deny Wrongdoing
In response to the lawsuit, attorneys representing the couple Fried have vehemently denied FTX’s allegations, calling them “completely false” and characterizing the lawsuit as a “dangerous attempt to intimidate Joe and Barbara” shortly before their son’s criminal trial.
It was common knowledge that Bankman-Fried’s parents were involved in FTX, but the allegations tie them to the exchange tighter than anyone thought, and their legal battle will make a fascinating sideshow to this already riotous circus.
