FTX is taking legal action against Sam Bankman-Fried’s parents to retrieve funds.
OAN’s Abril Elfi
2:09 PM – Tuesday, September 19, 2023
Attorneys for the bankrupt cryptocurrency company FTX are now suing Sam Bankman-Fried’s parents, accusing them of stealing millions of dollars from company funds to enrich themselves.
On Monday, the company released a filing where they stated that they were suing the founder’s parents, Joseph Bankman and Barbara Fried, in order to recover millions of dollars in alleged “fraudulently transferred and misappropriated funds,” also stating that the couple “exploited their access and influence within the FTX enterprise to enrich themselves.”
The case was filed in a Delaware bankruptcy court by FTX’s CEO, John J. Ray III, to recoup some of the funds that were allegedly paid out to relatives and business colleagues by Bankman-Fried before the cryptocurrency exchange’s collapse.
In November of last year, the worldwide exchange declared bankruptcy after experiencing the equivalent of a bank run.
Bankman-Fried pleaded not guilty to accusations that he defrauded investors and stole client deposits to pay costly real estate purchases, political campaign contributions, and dangerous trades at his cryptocurrency hedge fund trading firm, Alameda Research.
His federal fraud trial is set to begin on October 3rd in Manhattan.
According to the lawsuit, the parents of the founder, Bankman, a Stanford University law professor and expert in tax law, and Fried, a retired Stanford law professor, were both involved in the crimes that led to FTX’s bankruptcy, resulting in both criminal and civil investigations.
The lawsuit reportedly states that the FTX company was self-described as a “family business,” and that Bankman played a key role in the downfall of the company.
“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,” the complaint read. “And together, Bankman and Fried siphoned millions of dollars out of the FTX Group for their own personal benefit and their chosen pet causes. This action seeks to hold them accountable for their misconduct and recover assets for the debtors’ creditors.”
Attorneys representing Bankman and Fried issued a statement rejecting the accusation and criticizing John Ray III, who was named CEO when FTX filed for bankruptcy.
The lawsuit claims that the couple participated in a scheme in which their son handed them a nontaxable “gift” of $10 million.
Bankman-Fried received a loan from Alameda and subsequently transferred the funds to his parents as part of the scam. The transaction is referred to in the lawsuit as “part of a scheme and pattern to enrich and otherwise benefit themselves.”
According to the lawsuit, Bankman and Fried received more than $18.9 million in FTX currency in order to acquire a 30,000-square-foot luxury mansion in the Bahamas, as well as more than $90,000 in FTX-funded expenses to equip and maintain the property.
Ryan Salame, the former co-CEO of FTX Digital Markets, also pleaded guilty earlier this month to paying tens of millions of dollars in unlawful campaign contributions to Democrat politicians and engaging in a criminal conspiracy to operate an unregistered money transfer business.
Meanwhile, during a federal appeals court panel on Tuesday, Bankman-Fried’s attorneys asserted that the judge’s decision to revoke his $250 million bond and remand him in pretrial prison has harmed his free expression rights and capacity to prepare for trial.
Last month, the judge revoked Bankman-Fried’s bail after finding probable cause that he tampered with witnesses and evidence.
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What are the potential implications for the cryptocurrency industry as a whole if Bankman-Fried’s trial ends with a guilty verdict
To prepare for his upcoming trial. They argued that Bankman-Fried is not a flight risk and should be released on bail.
The allegations against Bankman-Fried’s parents add another layer to the complex legal battle surrounding FTX’s bankruptcy. The company’s collapse has left many investors and creditors in a difficult position, and they are now seeking to recover their losses by any means necessary.
The lawsuit filed by FTX alleges that Bankman-Fried’s parents played a significant role in the fraudulent activities that led to the company’s downfall. It accuses them of misappropriating funds and using their position within the company to enrich themselves. The suit also claims that the couple received millions of dollars in FTX currency for personal use, including the purchase of a luxury mansion in the Bahamas.
The allegations against Bankman-Fried’s parents come on the heels of his own legal troubles. He has been charged with defrauding investors and stealing client deposits to fund his personal expenses, including real estate purchases and political campaign contributions. His trial is set to begin on October 3rd and could have far-reaching implications for the cryptocurrency industry as a whole.
Bankman-Fried’s defense team has been fighting to secure his release on bail. They argue that the judge’s decision to revoke his bond and detain him before trial infringes on his rights to free expression and hinders his ability to properly prepare for his defense. They maintain that he is not a flight risk and should be allowed to await trial in a less restrictive environment.
The outcome of Bankman-Fried’s trial and the lawsuits against his parents will have significant implications for the future of FTX and the wider cryptocurrency industry. The case highlights the need for greater transparency and regulation within the industry to protect investors and prevent fraudulent activities.
As the legal battles continue, it is crucial for all parties involved to adhere to the principles of due process and for a fair and impartial judgment to be reached. The allegations against Bankman-Fried’s parents, if proven true, would further demonstrate the need for accountability and consequences for those who engage in fraudulent practices.
In conclusion, the bankruptcy and legal battles surrounding FTX have shone a light on the potential risks and pitfalls of the cryptocurrency industry. The allegations against Sam Bankman-Fried’s parents add another layer of complexity to an already convoluted situation. It is now up to the courts to determine the truth and hold all parties accountable for their actions. Only through transparency and proper regulation can the cryptocurrency industry regain the trust of investors and ensure its long-term viability.
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