Last Updated on September 19, 2023 by Bitfinsider
The parents of the founder of the defunct cryptocurrency exchange, Sam Bankman-Fried, are the target of a lawsuit filed by the bankruptcy estate of FTX, which seeks to recoup “millions of dollars in fraudulently transferred and misappropriated funds” that the pair is said to have taken.
The debtors of FTX and its affiliated company, Alameda Research, are also requesting damages related to purported wrongdoing and breaches of fiduciary duties, referring to the defendants as Bankman and Fried, respectively.
A 63-page court filing was filed with the U.S. Bankruptcy Court for the District of Delaware on Monday. It states that as Bankman-Fried’s parents, Bankman and Fried used their access and influence within the FTX enterprise to enrich themselves, directly and indirectly, by millions of dollars, and knowingly at the expense of the debtors in these Chapter 11 Cases and their creditors.
It is believed that Bankman-Fried and persons connected to FTX embezzled billions of dollars from client cash, making this one of the biggest fraud cases in American history. The founder of FTX is facing a number of criminal accusations, including fraud and money laundering, and is getting ready for his trial from prison next month. He has submitted a not guilty plea to these counts.
The paper shed light on Bankman’s usage of the term “family business,” which he first used in 2018 and continued to use often to describe the FTX Group. Despite the FTX Group’s financial difficulties, the lawsuit claimed that Bankman and Fried were still making significant profits from this alleged “family business.”
The banker was crucial in maintaining this climate of deceit and egregious mismanagement, as well as in obstructing reports that would have exposed the FTX Insiders’ wrongdoing. Additionally, Bankman and Fried stole millions of dollars from the FTX Group for their own personal gain and preferred charities, according to the document.
Professors Bankman and Fried of Stanford Law School are said to have purchased a lavish 30,000 square foot property in The Bahamas known as “Blue Water” or “Old Fort Bay” in February 2022.
According to the court filing, the debtors provided all of the monies for this acquisition, with neither Bankman nor Fried personally contributing any of the almost $19 million in total cash payment, including taxes and fees.
In addition, Bankman was accused in the case of having proudly declared himself to have been an early investor in Alameda, the trading division of the FTX Group, which executives were allegedly using to embezzle billions of dollars from investors and customers.
The filing also revealed that Bankman spent $1,200 per night on hotel stays, travelled on privately chartered jets, received millions of dollars in unearned “gifts” and real estate, and even costarred with “Seinfeld” writer Larry David in a Super Bowl commercial—all of which occurred while the FTX Group was on the verge of bankruptcy.
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