Bankrupt cryptocurrency exchange FTX and its affiliated entities are suing Joseph Bankman and Barbara Fried, the parents of the company’s disgraced founder and former CEO Sam Bankman-Fried (SBF), for breaching their fiduciary duties and carrying out fraudulent transfers. Have done. unjust enrichment.
According to a petition filed Monday in the United States Bankruptcy Court for the District of Delaware, FTX seeks to recover millions of dollars fraudulently transferred and misused by SBF’s parent.
FTX goes after SBF’s parent
In the complaint, FTX accused Bankman and Fried of deliberately exploiting their access and influence within the bankruptcy estate to enrich themselves at the expense of the venture’s debtors. While the company presented itself to investors and the public as a sophisticated group of crypto exchanges and businesses, it was run as a family business driven by fraud to benefit a group of insiders.
Bankman and Fried, both Stanford Law School professors, played key roles in perpetuating FTX’s culture of misrepresentation and gross mismanagement. They helped conceal allegations that could have exposed FTX’s fraudulent activities. SBF’s father helped the company’s management avoid taxes due to his deep understanding of tax law.
“Given his background and positions, and the ear of his son Bankman-Fried, Bankman was well placed to insist on and enforce internal controls and raise the alarm about misconduct within FTX Group.” Was. “Instead, Bankman remained silent and, in at least one case, helped silence a complainant whose allegations threatened to expose fraud within FTX Group,” the plaintiffs said.
On the other hand, Fried was responsible for the SBF’s political contribution strategy. He encouraged his son and other insiders to avoid federal campaign finance disclosure rules by engaging in straw donations and hiding that FTX Group was the source of the contributions.
The plaintiffs are seeking damages and eviction
Because of their role in the fraudulent management of FTX, Bankman and Fried enjoyed numerous benefits, including $1,200 per night hotel stays, cash gifts, luxury properties worth millions of dollars, airplane tickets, and salaries. He also donated millions to Stanford University to boost his professional and social status.
The FTX charged SBF’s parent with 12 counts, including fraudulent transfer, unjust enrichment and breach of fiduciary duties. The plaintiffs seek to determine compensation during the trial and to recover all compensation paid to the defendants.
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