Bankrupt crypto exchange FTX (CRYPTO: FTT) is back in the news again. The debtors have now initiated legal action against the parents of FTX founder Sam Bankman-Fried, Joseph Bankman and Barbara Fried, claiming that they have skimmed huge sums of money through their involvement in the exchange’s business.
Not only do the debtors claim that the parents’ mis utilized access within the FTX empire, but they were also very involved from inception to collapse.
The lawsuit indicates, “The couple either knew — or ignored bright red flags revealing — that their son, Bankman-Fried, and other FTX Insiders were orchestrating a vast fraudulent scheme.”
Debtors Claims: Bankman-Fried’s father had significant authority to make decisions for FTX as its “de facto officer.” He also held executive positions on FTX’s management team.
Bankman-Fried’s mother advised FTX on its political contributions, which made the exchange donate huge amounts to Mind the Gap, a political action committee that she co-founded.
Both parents, Stanford law professors, earned rewards like a $10 million cash gift and a $16.4 million Bahamas luxury property through their involvement in FTX. Privately chartered jets and expensive hotel stays are some of the expenditures made at the cost of FTX money.
FTX bankruptcy protection filing dates to November 2022 when there was a dent seen on the exchange’s deposits. Bankman-Fried is also charged with utilizing customer deposits to finance billions of dollars in venture capital investments, political donations, and luxury real estate purchases.
The first two trials centering around Bankman-Fried are slated to start on Oct. 3. He faces seven charges related to fraudulent activities involving user funds at FTX and its trading arm, Alameda Research.
Both Bankman-Fried and his father pleaded not guilty.
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