FTX, the collapsed cryptocurrency exchange, is suing the parents of its disgraced former CEO, Sam Bankman-Fried, as it seeks to recover "millions" in fraudulently transferred funds.
In a court filing published late Monday, officials for the now-bankrupt FTX estate said they were seeking the return of property or payments made to either Barbara Fried or Joseph Bankman, the parents of Sam Bankman-Fried. The estate is also seeking punitive damages from what it called "conscious, willful, wanton, and malicious conduct."
"FTX Trading paid $18,914,327.82, inclusive of taxes, fees, and costs, for Blue Water, to which Bankman and Fried received title, as well as various expenses related to Blue Water totaling more than $90,000," the filing said.
FTX added that the Stanford University academics "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."
“This is a dangerous attempt to intimidate Joe and Barbara and undermine the jury process just days before their child’s trial begins," said Sean Hecker and Michael Tremonte, counsel for Joe Bankman and Barbara Fried respectively, in a statement emailed to TheStreet. "These claims are completely false. Mr. Ray and his massive team of lawyers, who are collectively running up countless millions of dollars in fees while returning relatively little to FTX clients, know better."
FTX filed Chapter 11 in November 2022
FTX, at one time the world's second largest crypto platform with a market value of around $32 billion, filed for Chapter 11 bankruptcy protection in November of last year amid a liquidity crisis. Multiple media reports have suggested that the situation was linked to the use of customer deposits to back risky trades made by the group's wholly owned hedge fund, Alameda Research.
John Ray, a corporate restructuring expert brought in to manage FTX's bankruptcy proceedings, said that a small group of inexperienced, unsophisticated and potentially compromised individuals" was key to the group's ultimate failure.
Bankman-Fried, who was arrested in the Bahamas the following month, is currently being held in prison in New York after breaching his bail conditions by releasing private correspondence with his former partner, and Alameda Research CEO Caroline Ellison, to The New York Times.
His trial, based on seven charges of wire, securities and commodities fraud and money laundering, is set to begin on October 2 in Manhattan.
- Get investment guidance from trusted portfolio managers without the management fees. Sign up for Action Alerts PLUS now.
