The ongoing saga surrounding the collapse of the cryptocurrency exchange FTX has taken a new turn, with the exchange filing a lawsuit against the parents of its founder, Sam Bankman-Fried, accusing them of misappropriating millions of dollars.
According to the report, the lawsuit, filed in federal court in Delaware, accuses Joe Bankman and Barbara Fried of using their influence within the FTX enterprise to enrich themselves. Therefore, FTX seeks recovery of millions of dollars the couple received from their son, Sam Bankman-Fried.
The complaint alleges that Stanford law professors, Mr. Bankman and Ms. Fried, received a $10 million cash gift from their son and a $16.4 million home in the Bahamas.
In addition, FTX claims that Mr. Bankman helped cover up complaints by a former lawyer for his son’s business and that Ms. Fried coached Mr. Bankman-Fried and another FTX executive to evade disclosure requirements for political donations.
During the initial stages of the legal proceedings that followed the collapse of the exchange, it was revealed that Sam Bankman-Fried had made political donations, including to President Joe Biden.
Despite the revelation of the donations, as of December 20, 2022, the White House didn’t give any directive towards reimbursement of the funds pegged at $5.2 million.
In the same period, a DNC representative said that the funds, close to $1 million, given to Democrats, will also be returned to the exchange.
Reluctance from Sam’s parents
Furthermore, the suit stated that the couple “either knew – or ignored bright red flags revealing – that their son, Bankman-Fried, and other FTX Insiders were orchestrating a vast fraudulent scheme.”
FTX, formerly among the world’s largest crypto exchanges, declared bankruptcy in November 2022 when a rush of withdrawals revealed an $8 billion shortfall in the exchange’s funds.
Federal prosecutors in Manhattan charged Sam Bankman-Fried with orchestrating a scheme to use customer deposits to finance various investments, political donations, and luxury real estate purchases.
Sam Bankman-Fried has pleaded not guilty and is scheduled to go on trial on October 3, 2023.
Also, in the course of the bankruptcy proceedings, John Ray III, assumed the CEO of the new FTX, stirring the company in a new direction including making plans to pay creditors as well as setting a new vision for the future of the firm that was once admired around the world.