The bankrupt husk of crypto exchange FTX has filed a lawsuit against Stanford law professors Joseph Bankman and Barbara Fried, parents to the company's former CEO and fallen crypto wunderkind, Sam Bankman-Fried. The charge, according to court documents? That the couple "exploited their access and influence within the FTX enterprise to enrich themselves, directly and indirectly, by millions of dollars, and knowingly at the expense of the debtors."
In the months since FTX's brutal November implosion, representatives for Bankman and Fried have maintained that neither parent was particularly involved in the business — a claim that SBF himself has reiterated, telling The New York Times back in December that his parents were never involved in any "relevant parts of the business," like risk assessment or balancing company books.
Recent reports, however, have painted a much different picture of the Stanford professors' involvement in the now-defunct crypto exchange, with court documents revealing both figures to be quite entangled in the company's operations, personally profiting immensely as the company climbed to a peak $32 billion valuation. Now, FTX is suing Bankman and Fried for those FTX-gleaned profits, arguing that SBF's parents are holding onto cash that was never really theirs in the first place. The money, according to the suit, really belongs to defrauded FTX customers.
Bankman and Fried "either knew — or ignored bright red flags revealing — that their son, Bankman-Fried, and other FTX insiders were orchestrating a vast fraudulent scheme," reads the suit.
FTX is specifically asking that Bankman and Fried return a $10 million cash gift they received from the crypto exchange in 2022. It's important to note that two major aspects of the professors' financial relationship were already public knowledge: 1. the existence of this cash gift, which they'd refused to give back on grounds that they needed the money to fight their son's legal battle, and 2. that FTX funds had been used to purchase a $16 million Bahamian condo deeded to Bankman and Fried. (According to Bankman and Fried, though, the house wasn't really theirs, it was FTX's — they would just stay in it while they were in town.)
The new court filings, however, lay bare a number of other mommy and daddy-related expenses that previously flew under the radar. For example, according to the suit, some $90,000 in FTX funds were used to pay for various condo expenses including "maintenance, cleaning services, utilities, furnishings, property assessments, and residency fees." This money, says FTX, was never reimbursed.
Speaking of condo expenses, the suit also alleges that Fried had FTX employees order furniture for them. Employees were allegedly tasked with ordering a "sofa, at least eight vases, and five rugs, one of which was a Persian hand-knotted rug costing more than $2,500." FTX claims that all of these purchases were either placed on a company card, or on the personal card of an employee who was later paid back with FTX funds.
The suit only gets more bizarre from there. In one instance, annoyed that he was only making around $16,000 per month during his official tenure as an FTX employee, Bankman complained to his son in an email, explaining that he was supposed to be making an annual salary of one million — before looping in Fried to see that the change was made. (As Coinbase's Conor Grogan put it in a post on Twitter-formerly-X, Bankman seemingly pulled the classic "I'm telling your mother!" move.)
"Gee, Sam I don't know what to say here," Bankman wrote in the email, according to the court filing. "This is the first [I] have heard of the 200K a year salary! Putting Barbara on this."
Elsewhere, the suit alleges that Bankman charged private jet tickets, $1,200-a-night hotel stays, and even Formula 1 tickets to the crypto company. Fried, meanwhile, is said by the suit to have had a major role in her son's political donations, advising the family's prodigal scion to make "straw donations" — a form of political donation designed to "avoid (if not violate) federal campaign finance disclosure rules" by "concealing the FTX Group as the source of the contributions," as the lawsuit reads.
In a statement to the NYT, lawyers for the Bankman-Frieds argued that the allegations are "completely false," adding that the lawsuit is "a dangerous attempt to intimidate Joe and Barbara and undermine the jury process" ahead of the SBF's criminal trial.
Still, it's unclear what evidence, if any, the couple has to combat the suit's allegations. And considering that their younger son, Gabriel Bankman-Fried, apparently wanted to use FTX funds to — checks notes — buy the island of Nauru and turn it into a doomsday haven, where they might perhaps do human genetic experimentation as well, it wouldn't be surprising to see every face on the family's cursed Mount Rushmore collapse. As it turns out, sweeping things under the rug might just come back to bite you — even, sadly, when that rug costs a cool $2,500.
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