Bankrupt crypto exchange FTX Trading has filed a lawsuit against the parents of its founder and former CEO, Sam Bankman-Fried (SBF). The lawsuit, filed on Monday, alleges fraudulent transfers and misappropriation of funds by Joseph Bankman and Barbara Fried, also law professors at Stanford Law School, according to a recent report.
FTX seeks to recover substantial sums of money it claims were transferred unlawfully. The lawsuit demands damages for the estate, the return of properties or payments made to the parents by the exchange in the past, and punitive damages due to “conscious, willful, wanton, and malicious conduct.”
The court document reveals that FTX Trading paid $18,914,327.82 for Blue Water, which SBF’s parents owned. In addition to the purchase price, various expenses related to Blue Water amounting to over $90,000 were allegedly incurred by FTX.
The lawsuit claims that Bankman, using his knowledge of tax law and FTX Group’s corporate structure, helped himself and Fried receive $10 million cash from Alameda Ltd. The exchange accuses them of exploiting their legal expertise to enrich themselves at FTX’s expense.
Bankman’s luxury lifestyle, including a Super Bowl commercial appearance and withdrawals of millions from FTX, are also questioned. The complaint states that Bankman knew about the exchange Group’s financial troubles.
Barbara Fried is also accused of using her influence to boost political contributions for Mind the Gap (MTG), a PAC she co-founded. The lawsuit claims she directed tens of millions of dollars to MTG and MTG-supported causes. While the exact amount isn’t disclosed, the filing points out extravagant expenses, like $1,200-per-night hotel stays and plane tickets.
Bankman reportedly received a substantial annual salary of $200,000 as a senior adviser to the exchange foundation and over $18 million from the Bahamian property transaction, in addition to $5.5 million in FTX Group donations to Stanford University.
Market Remains Stable Amid FTX Liquidations
Meanwhile, another report suggests that the sale of tokens held by the exchange in its bankruptcy proceedings is unlikely to cause market disruption. Coinbase’s research report indicates that the liquidations are currently capped at $50 million per week, possibly increasing to $200 million a week, subject to approval by committees representing FTX debtors.
With the exchange holding significant crypto assets, including $1.16 billion in Solana (SOL), $560 million in Bitcoin (BTC), $192 million in Ether (ETH), and $1.49 billion in other tokens, the court’s decision to allow the exchange to sell and invest these assets to repay creditors marks a pivotal development in the ongoing bankruptcy saga.
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