Sam Bankman-Fried’s parents sued by embattled crypto company FTX
Mr Bankman-Fried, 31, has pleaded not guilty to charges of fraud and conspiracy and his trial is set for 3 October in New York
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Your support makes all the difference.Crypto exchange FTX has sued founder Sam Bankman-Fried’s parents to recover millions of dollars of “fraudulently transferred and misappropriated” company funds.
The lawsuit filed by the bankrupt company claims that Stanford law professors Joe Bankman and Barbara Fried both knew “or ignored bright red flags” that their son and his business partners were “orchestrating a vast fraudulent scheme.”
FTX collapsed in November as questions about its financial health sparked a huge withdrawal of customer funds and prosecutors say the company is now at the heart of one of the biggest alleged financial frauds in US history.
Mr Bankman-Fried, 31, has pleaded not guilty to charges of fraud and conspiracy and his trial is set for 3 October in New York.
Some of his former business partners have already entered guilty pleas in deals with Southern District of New York prosecutors.
The lawsuit, which was filed on Monday, claims that the couple and their son discussed transferring a $10m cash gift and a luxury property in the Bahamas worth $16.4m to them, as the company collapsed.
No criminal charges have been brought against Mr Bankman or Ms Fried.
Lawyers for the couple have branded the allegations “completely false” and said it was a “a dangerous attempt to intimidate Joe and Barbara and undermine the jury process just days before their child’s trial begins.”
Prosecutors allege that FTX used its customers’ funds to support trading firm Alameda Research, while also raising $1.8bn from investors.
“We allege that Sam Bankman-Fried built a house of cards on a foundation of deception while telling investors that it was one of the safest buildings in crypto,” said SEC Chair Gary Gensler.
FTX is now run by John J Ray III, who has testified that the FTX case is one of “old-fashioned embezzlement.”
After taking over the company, Mr Ray told the bankruptcy court that in his career he he had never come across “such a complete failure of corporate controls” and “absence of trustworthy financial information.”
When the company went bankrupt it owed customers around $8.7bn, and in April FTX told a court that it had recovered $7.3bn in assets.
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