Bankrupt FTX accuses Stanford professors of plundering millions from crypto exchange

Bankrupt FTX accuses Stanford professors of plundering millions from crypto exchange

The parents of former FTX CEO Sam Bankman-Fried are facing a lawsuit from the bankrupt cryptocurrency exchange, which claims they exploited their son’s companies to enrich themselves and their pet causes.

FTX seeks to recover millions from Bankman and Fried

FTX, which collapsed in December 2022 after a massive fraud scandal involving its founder Sam Bankman-Fried, filed a complaint on Monday in federal bankruptcy court against Joseph Bankman and Barbara Fried, both longtime professors at Stanford University Law School. The debtors of FTX and sister hedge fund Alameda Research accuse Bankman and Fried of receiving millions of dollars from their son’s companies that were in danger of being insolvent, and directing funds to organizations that served their personal interests.

Bankrupt FTX accuses Stanford professors of plundering millions from crypto exchange
Bankrupt FTX accuses Stanford professors of plundering millions from crypto exchange

The complaint alleges that Bankman and Fried accepted $10 million gifted from their son in early 2022 that originated from Alameda, and were deeded a $16.4 million property in the Bahamas that was paid for with funds from FTX Trading. It also points to correspondence between Bankman and Fried and FTX insiders, and notes Bankman was involved in decision-making at the exchange and its connected entities, even taking a leave of absence from Stanford to join the FTX payroll.

Bankman and Fried used their influence to plunder FTX, debtors claim

The debtors claim that Bankman and Fried used their access and influence within the FTX enterprise to plunder it in order to enrich themselves and their pet causes. They allege that Bankman directed some $5.5 million to be donated to Stanford, his employer at the time, and Fried was successful in having tens of millions of dollars from her son’s companies donated to MTG, a political action committee she co-founded.

“Bankman and Fried deployed their decades of experience as sophisticated law professors and veneer of legitimacy not to help the FTX Group, but rather to plunder it in order to enrich themselves and their pet causes,” the complaint reads.

Bankman-Fried remains under house arrest on $250 million bond

Sam Bankman-Fried, who founded FTX in 2019 and became one of the richest people in the world thanks to the crypto boom, was arrested in December 2022 in the Bahamas on charges of wire fraud, securities fraud, money laundering, and obstruction of justice. He is accused of siphoning $100 million stolen from customers into US politics to influence crypto legislation, as well as tampering with witnesses and evidence.

He is currently under house arrest at his parents’ home in California on a $250 million bond, but a federal judge hinted last month that he could be sent back to jail if he violates his bail conditions. He allegedly used a virtual private network (VPN) multiple times in recent weeks, which prevents the government from monitoring his online behavior.

His trial is scheduled for June 2023. If convicted, he faces up to 20 years in prison.

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