Sam Bankman-Fried: Parents sued by bankrupt crypto exchange FTX over ‘misappropriated funds’
The parents of a man who founded a cryptocurrency exchange which later went bankrupt are being sued by the company, alleging the pair syphoned off millions of dollars from FTX’s funds to enrich themselves.
Allan Joseph Bankman and his wife Barbara Fried are accused of helping to set up a scheme where their son Sam Bankman-Fried gave them a $10m (£8m) “gift”.
And the couple used $16m (£13m) in FTX funds to buy a luxury home in the Bahamas, even as the firm teetered on the brink of collapse, it is claimed.
Bankman, a Stanford law professor and tax law expert, and Fried, a retired Stanford law professor, also pushed the exchange to make tens of millions of dollars in charitable contributions to their “pet causes” and the university, FTX said.
Sam Bankman-Fried
The company alleged Bankman-Fried ran it as a “family business” and misappropriated billions of dollars in customer funds to benefit a small circle of insiders, including his parents.
However, Bankman-Fried has insisted his parents “weren’t involved in any of the relevant parts” of the business.
FTX, which filed bankruptcy last November owing $8.7bn (£7bn) to its customers with Bankman-Fried resigning as chief executive, is trying to recover damages allegedly caused by the couple.
FTX’s case
The lawsuit states: “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’.
“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.
“And together, Bankman and Fried syphoned millions of dollars out of the FTX Group for their own personal benefit and their chosen pet causes.”
Fried caused Bankman-Fried as well as other executives to contribute millions of dollars to a political action committee that she co-founded, according to FTX.
Read more:
Sam Bankman-Fried ‘living on bread and water’
Disgraced FTX boss ‘donated stolen customer funds to politicians’
Bankman-Fried pleads not guilty to fraud
Lawyers for the pair have denied the allegations saying they are completely false, adding: “This is a dangerous attempt to intimidate Joe and Barbara and undermine the jury process just days before their child’s trial begins.”
Bankman-Fried has pleaded not guilty to charges that he defrauded FTX customers by using their funds to prop up his own risky investments.
He is currently detained in jail ahead of a trial set to begin in New York on 3 October.
Other former FTX executives have pleaded guilty to criminal charges.
More than $7bn (£5.6bn) in assets has been recovered by FTX to repay customers, and it is trying to get back more with lawsuits against FTX insiders and other defendants.
Dozens of supporters were outside court as the man accused of fatally shooting the chief executive of UnitedHealthcare made his first appearance.
Luigi Mangione has pleaded not guilty to multiple counts of murder following the 4 December killing of Brian Thompson, 50, outside a midtown Manhattan hotel.
The 26-year-old is accused of ambushing and shooting the executive as he walked to an investor conference.
Luigi Mangione supporters stand outside the Supreme Court. Pic: AP Photo/Stefan Jeremiah
Dozens of people who showed up in court to support the suspect including former army intelligence analyst Chelsea Manning who was jailed for stealing classified diplomatic cables.
Dozens more queued in the hallway.
Mangione is also facing federal charges that could carry the possibility of the death penalty.
The judge set a deadline of 9 April to submit pre-trial motions.
Luigi Mangione is accused of fatally shooting Brian Thompson. Pic: Steven Hirsch/New York Post via AP
In addition to the New York cases, Mr Mangione also faces charges of forgery, carrying firearms without a licence, and other counts in Pennsylvania, where authorities arrested him at a McDonald’s.
Police say he was in possession of a gun, bullets, multiple fake IDs and a handwritten document that expressed “ill will” towards corporate America.
He is being held in a Brooklyn jail alongside several other high-profile defendants, including music mogul and rapper Sean “Diddy” Combs, and disgraced crypto entrepreneur Sam Bankman-Fried.
The killing prompted some to voice their resentment at US health insurers, with Mangione attracting a cult following.
A poll taken in the wake of the shooting showed most Americans believe health insurance profits and coverage denials were partly to blame for the incident.
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