The infamous FTX founder Sam Bankman-Fried’s parents are accused of embezzling millions of dollars from the exchange’s now-bankrupt customers. Barbara Fried and Joseph Bankman’s counsel adamantly assert that the accusations are “completely false.”

FTX Scandal Widens: Bankman-Fried’s Parents Face Major Lawsuit

FTX debtors claimed in a complaint filed on September 18 that Joseph Bankman and Barbara Fried took advantage of their insider status to profit themselves through gifts, real estate investments, and donations to their preferred charities. According to the allegations, the couple participated in their son Sam Bankman-Fried’s alleged fraud.

According to the court document, Bankman “recognized and took full advantage of his insider status, explaining in February 2021 that he was [very] involved in the business.” Indeed, Bankman bragged that he had invested early in Alameda, the FTX Group’s proprietary trading division, which its insiders had exploited to siphon off billions of dollars in investor and client funds.

The court document also adds:

Bankman was well-positioned to insist on and implement internal controls and express concerns about the misbehavior within the FTX Group, given his background and responsibilities, as well as the support of his son, Bankman-Fried. Instead, Bankman chose to remain silent and, in at least one instance, assisted in stifling a complainant whose accusations threatened to reveal the fraud at the FTX Group.

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FTX/USD Price Chart – Source: Tradingview

According to the lawsuit, FTX funds sent Bankman and Fried a $10 million cash “gift” at the beginning of 2022. Additionally, it claims that the pair benefited from the $16.4 million luxury property purchase made in the Bahamas with money from FTX customers.

The ‘Family Business

Barbara Fried, SBF’s mother, is portrayed in the lawsuit as her son’s most important political donation advisor. It charges her with allegedly encouraging illegal donations meant to circumvent disclosure regulations.

“Fried, concerned with the optics of her son and his companies donating money to the organization she co-founded and other causes she supported, encouraged Bankman-Fried and others within the FTX Group to avoid (if not violate) federal campaign finance disclosure rules by engaging in straw donations or otherwise concealing the FTX Group as the source of the contributions,” the FTX estate claims.

Bankman and Fried’s attorneys, Sean Hecker and Michael Tremonte, vigorously refute the allegations. Just days before their child’s trial starts, there is a risky attempt to intimidate Joe and Barbara and sabotage the jury selection process. These allegations are wholly untrue,” Hecker wrote in an editorial that The Block published.

The accusations intensify the legal issues arising from the FTX collapse, which have given rise to inquiries and lawsuits aimed at Bankman-Fried, executives, advisors, and others associated with the company. Criminal proceedings are being brought against Bankman-Fried for the alleged fraud.

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