Here’s How SBF’s Dad Recklessly Misused FTX Funds

With SBF set for trial, FTX targets the founder’s parents, leveling a series of shocking accusations.

by Insha Zia. Fact checked by: Ciaran Lawler, Editor: Stefan Trapp

Published: September 21, 2023 │ 1:30 AM GMT

Joseph Bankman and Barbara Fried in the foreground, with Sam Bankman-Fried projected on storm clouds in the background. — *Created by Gabor Kovacs from DailyCoin*

FTX debtors are targeting SBF’s parents.
The exchange alleged SBF’s parents leveraged their relationship with SBF to profit handsomely.
Despite leveling a series of allegations, FTX acknowledged the case is complex.

FTX’s new management is fighting tooth and nail to recover lost funds as regulators and creditors breathe down their necks, demanding restitution. After initially focusing on Sam Bankman-Fried’s (SBF) past endorsement deals to claw back funds, the exchange has turned its attention to the founder’s parents, alleging they siphoned millions out of the exchange for their benefit.

FTX: “Bankman and Fried Used Their Influence on SBF”

On Monday, FTX filed a lawsuit against former CEO SBF’s parents, Joseph Bankman and Barbara Fried, accusing them of enriching themselves with customer funds. The exchange contended that both Bankman and Fried leveraged their relationship with SBF to “profit handsomely” and position themselves as insiders at the center of the FTX group, ultimately leading to the collapse of FTX.

In the lawsuit, FTX leveled a series of allegations against SBF’s parents, spanning from receiving non-taxable gifts to political contributions to funding their lavish lifestyle. Here’s a brief list of FTX’s shocking allegations against Joseph Bankman and Barbara Fried:

Bankman used his status as a tax lawyer and influence over his son to position himself as a “general overseer of the FTX businesses.”
As FTX’s strategic advisor, Bankman funneled exchange funds to his chosen causes, including donations to Stanford University, managed tax deductions, and issued hundreds of millions of dollars in unapproved loans.
On multiple occasions, Bankman allegedly lobbied his son to raise his salary to $1 million, acquire properties and gifts worth millions, and finance his extravagant lifestyle, all at the expense of FTX’s customers and creditors.
Bankman’s unusual demands extended to securing a cameo with Larry David in the FTX Super Bowl commercial and for his sister to run a $2.3 million Hackathon.
FTX also attributed over $40 million of its political contributions to Barbara Fried, Bankman’s “partner in crime,” claiming she repeatedly “dunned” SBF to make these contributions.

While FTX seeks to recover the vast amount of funds it claims SBF’s parents extracted from the FTX group, it acknowledged a challenge – its accounting software and records did not accurately reflect the dealings it connected to Bankman and Fried.

FTX’s Complex Case

Bankman and Fried’s legal representatives have yet to share a comment with DailyCoin. However, in a joint statement to several crypto publications, attorneys Sean Heckler and Michael Tremonte accused FTX of attempting to intimidate Bankman and Fried, categorically denying all claims.

Nevertheless, FTX is actively pursuing damages related to the estate and is seeking the return of any property or payments made to the parents by FTX in the past. Additionally, the exchange is seeking punitive damages.

Despite the absence of clear records, the company’s complaint lists a range of expenses to Bankman and Fried. This includes over $19 million of expenses for their luxury residence in the Bahamas, $10 million in non-taxable cash gifts, $5 million in charitable donations to Stanford University, and more.

On the Flipside

SBF is currently behind jail, preparing for trial on October 3.
FTX engineering chief Nishad Singh, who was actively involved with SBF’s parents, pleaded guilty in February to several charges.
Previously, a judge granted bail to SBF, allowing him to live with his parents in Palo Alto.
Stanford University shared that it plans to return the funds it received as donations to FTX debtors.

Why This Matters

Effects from FTX’s collapse still linger in the crypto landscape as regulators use stricter measures against crypto platforms. The new information revealed in the lawsuit could influence the trajectory of SBF’s case scheduled for trial on October 3.