Failed crypto exchange FTX is suing founder Sam Bankman-Fried’s parents, accusing them of siphoning millions of dollars in company funds to enrich themselves and their “pet causes.”
The lawsuit seeks to recover funds that FTX executives say were “fraudulently transferred and misappropriated” by Bankman-Fried’s parents.
Joe Bankman and Barbara Fried, both tenured law professors at Stanford, knew “or ignored the red flags” that indicated their son and his business partners were “orchestrating a vast fraudulent scheme.” according to the lawsuit.
Attorneys representing Bankman and Fried released a statement calling the lawsuit’s claims “completely false” and “a dangerous attempt to intimidate Joe and Barbara and undermine the jury process just days before their child’s trial begins.” .
FTX went bankrupt in November last year, as questions about its finances shook crypto markets and caused a sudden, mass withdrawal of customer funds. The case is now at the center of a federal investigation into what prosecutors have called one of the largest financial frauds in U.S. history.
Bankman-Fried, 31, has pleaded not guilty to several fraud and conspiracy charges and is scheduled for trial on October 3.
The lawsuit against Bankman and Fried, filed Monday evening, claims that Bankman and Fried discussed with their son the transfer of a $10 million cash gift and a $16.4 million luxury property in the Bahamas even as the company was on the brink of insolvency.
FTX is now run by John Ray III, a corporate restructuring expert who said earlier this year that the FTX affair was an “old-fashioned embezzlement” affair carried out by unsophisticated businessmen .
This story is developing and will be updated.