A detailed overview of the crypto dispute involving FTX and the parents of founder bankman-fried
Managers at the bankrupt corporation accuse the pair in a petition of retaining millions of “fraudulently transferred” cash and turning a blind eye to company malfeasance. The case was brought on behalf of those who were owed money following the firm’s demise. Mr Bankman-Fried was arrested last year as a result of the company’s demise.
Prosecutors in the United States have accused the former millionaire, dubbed the “King of Crypto,” of unlawfully moving millions from the exchange to cover losses at his trading firm, make political donations, and purchase real estate. He has rejected the charges and is being held in jail until his trial next month.
His parents’ attorneys said the allegations against them were “completely false” and intended to harm their son’s chances at trial. Under the lawsuit, which was filed as part of a larger bankruptcy case, Mr. Bankman-Fried’s parents – both Stanford University professors at the time – used their “access and influence within the FTX enterprise to enrich themselves, directly and indirectly, by millions of dollars.”
According to the statement, they got a $10 million (£8 million) cash present from funds owned by Alameda, an FTX partner firm, as well as a $16.4 million property in the Bahamas from FTX. FTX was previously one of the world’s largest cryptocurrency trading organizations, with assets predicted to be worth $15 billion in 2021. It declared bankruptcy last year after a sudden rush of consumers withdrawing funds revealed a massive hole in the company’s finances worth up to $8 billion.
Managers at the bankrupt firm claim Mr Bankman-Fried and other “insiders” used it as a “piggy bank,” and his parents “aided in perpetuating or benefiting from this fraudulent largesse.” According to the lawsuit, his father, Allan Joseph Bankman, a US tax law specialist, functioned as an adviser to FTX and “played a key role in perpetuating this culture of misrepresentation and gross mismanagement and helped cover up allegations that would have exposed the fraud.”
He also assisted in the dismissal of an internal complaint filed in 2019 alleging price manipulation. Mr. Bankman was allegedly pampered to $1,200-per-night hotel accommodations, while the lawsuit quotes messages in which he complains about earning a $200,000 income, believing it is intended to be $1 million.
Meanwhile, according to the petition, Mr. Bankman-Fried’s mother, Barbara Fried, helped guide her son’s political donations, encouraging him to conceal their source. Managers for FTX are attempting to recover money from the couple. The downfall of Mr. Bankman-Fried, one of the industry’s most prominent figures, sent shivers through the business and served to galvanize regulatory investigation.
