FTX accuses Sam Bankman Frieds parents of misusing company assets and files suit against them

Insolvent cryptocurrency exchange FTX filed a lawsuit against Sam Bankman-Fried’s parents on Monday, alleging that Stanford academics Joseph Bankman and Barbara Fried manipulated the business to profit themselves at the cost of FTX’s clients.

Sam Bankman-Fried, the company’s founder, allegedly managed FTX as a “family business” and syphoned off billions in client dollars for a select group of insiders, including his parents. FTX is currently under the direction of turnaround specialist John Ray.

In response to allegations that he used FTX clients’ money to support his own hazardous investments, Sam Bankman-Fried entered a not-guilty plea. He is presently incarcerated while awaiting his October 3 trial. Other former FTX executives have admitted guilt in relation to criminal accusations.

Sean Hecker and Michael Tremonte, the attorneys for Bankman and Fried, said in a joint statement that the allegations made by FTX were “completely false” and that the new action was a waste of money that might have been given back to FTX clients.

Just days before the start of their child’s trial, Hecker and Tremonte argued, “This is a dangerous attempt to intimidate Joe and Barbara and undermine the jury process.”

According to FTX’s complaint, Bankman and Fried took gifts from the firm totaling $10 million (about Rs 83 crore) in cash and $16.4 million (roughly Rs 136 crore) in the form of a luxurious home in the Bahamas while FTX teetered on the verge of bankruptcy. FTX said that Bankman and Fried also pressured the company to give tens of millions of dollars to charity, particularly Stanford University.

The father of Bankman-Fried, a tax specialist at Stanford Law School, frequently acted as the “adult in the room” in a business that was controlled by his son, now 31, and other executives with little to no managerial experience. However, the complaint claims that Bankman “stayed silent” in the face of fraud red flags and did little to stop FTX’s top executives from stealing from customers.

According to FTX, Fried had the most impact on how much money the company gave to politics. She convinced Bankman-Fried and other executives to give millions of dollars directly to a political action committee that she co-founded.

In response to allegations that it mishandled and misplaced client contributions in cryptocurrency totaling billions of dollars, FTX declared bankruptcy in November 2022.

In order to pay back consumers, FTX has successfully recovered more than $7 billion (about Rs. 58,300 crore) in assets. FTX is now seeking further recoveries by filing lawsuits against FTX insiders and other defendants who received funds from FTX prior to its bankruptcy.

Muhammad Rouf

I am Muhammad Rouf, the founder of TechFlax. I am expert in search engine optimization (SEO) and professional blogger. I think that everyone should be able to use technology to better their lives. We researched, analysed, and presented on this platform using all of our knowledge and we created a platform to develop a good relationship with the online community. In order for every user of social media to have access to the informational globe, we also covered social media through Tech Flax.

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