FTX Founder’s Parents Contest Clawback Lawsuit, Dismiss Allegations of Insider Involvement
In a recent submission made to a U.S. bankruptcy judge on Monday, Joseph Bankman and Barbara Fried, the parents of FTX founder Sam Bankman-Fried, have requested the dismissal of a lawsuit brought against them by FTX, refuting claims that they played a role in the company’s downfall. Meanwhile, Mr. Bankman-Fried’s parents are seeking to retrieve funds and gifts that were supposedly given to them by their son and his cryptocurrency exchange.
Motion to Dismiss
Bankman and Fried strongly denied being insiders of FTX who had the ability to influence the company’s financial decisions in the Delaware bankruptcy court on Monday. The motion to dismiss argues that FTX’s lawsuit lacks evidence demonstrating that the parents had control over the company or were aware of the circumstances that led to its financial collapse.
According to the filing, while Bankman occasionally provided legal advice, including tax guidance on the $10 million gift, he had no official position within FTX and lacked the authority to direct payments.
Additionally, the parents clarified that the disputed luxury property in the Bahamas served as shared accommodation for FTX, rather than being their exclusive residence.
Political Donations and Property Disputes
FTX alleges that Bankman-Fried’s parents received a $10 million cash gift, a $16.4 million luxury property in the Bahamas, and orchestrated donations totaling $5.5 million to Stanford University and at least $10 million to Fried’s political action committee. FTX claims that these transactions took place while the exchange was facing financial difficulties.
Furthermore, Barbara Fried denies any involvement in directing political contributions, emphasizing that she has no knowledge of the source and structure of FTX’s political donations.
The dispute over the Bahamas property adds another layer to the legal battle, as Bankman and Fried argue that it was a shared property of FTX and not their primary residence. They also state that FTX employees made use of the property.
Backdrop of FTX’s Bankruptcy
FTX, which was once a prominent cryptocurrency exchange, filed for bankruptcy in November 2022 after its founder, Sam Bankman-Fried, was convicted of fraud and conspiracy charges.
Despite the legal challenges, FTX has actively pursued efforts to recover assets for defrauded customers by clawing back from former insiders and partners. The exchange claims to have successfully recovered over $7 billion since initiating bankruptcy proceedings.
FTX has yet to respond to requests for comments on the recent motion to dismiss filed by Bankman and Fried.