Lawyers for collapsed cryptocurrency exchange FTX Trading have filed a lawsuit accusing the parents of Sam Bankman-Fried of exploiting their influence over their son and the company he founded to enrich themselves by millions of dollars.
The complaint filed Monday against Allan Joseph Bankman and Barbara Fried in the FTX bankruptcy case in Delaware seeks to recover damages allegedly caused to the company through breaches of fiduciary duties, fraudulent transfers, unjust enrichment and other wrongdoing.
The lawsuit alleges that 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 and resulted in both criminal and civil investigations.
“Despite presenting itself to investors and the public as a sophisticated group of cryptocurrency exchanges and businesses, the FTX Group was a self-described ‘family business,’” the lawsuit states.
“Bankman played a key role in perpetuating this culture of misrepresentations and gross mismanagement and helped cover up allegations that would have exposed the fraud committed by the FTX insiders,” the complaint adds. “And together, Bankman and Fried siphoned millions of dollars out of the FTX Group for their own personal benefit and their chosen pet causes. This action seeks to hold them accountable for their misconduct and recover assets for the debtors’ creditors.”
Attorneys for Bankman and Fried issue a statement denying the allegation and taking aim at John Ray III, who was named CEO when FTX sought bankruptcy protection and is charged with trying to clean up the mess left by its collapse.
“This is a dangerous attempt to intimidate Joe and Barbara and undermine the jury process just days before their child’s trial begins,” the attorneys for Bankman and Fried wrote. “These claims are completely false. Mr. Ray and his massive team of lawyers, who are collectively running up countless millions of dollars in fees while returning relatively little to FTX clients, know better.”