By
Temitope Olatunji
May 15th, 2024
SBF’s parents are said to have received millions of dollars from FTX and used political donations amounting to over $100 million to cover up.
The details leading to the collapse of the FTX crypto exchange and Alameda Research late last year are coming out amid next month’s trial for Sam Bankman-Fried (SBF). In the latest update, the current FTX officials sped by CEO John Ray III filed a legal action against SBF parents, Allan Joseph Bankman and Barbara Fried, for defrauding the bankrupt exchange of millions of dollars in the name of a family business. As a result, the legal action seeks to recover the millions of dollars to repay the distressed debtors.
The legal action described FTX as a family business that marketed itself as a sophisticated group of cryptocurrency exchanges.
SBF Parents Overcompensated by FTX for Pro Bono Services
Notably, SBF’s father, Bankman, is a renowned law professor at Stanford University with decades of experience in tax law. Reportedly, Bankman worked as a pro bono counsel to advise the cryptocurrency exchange on matters related to corporate taxes. As a result, Bankman was handsomely rewarded with millions of dollars, which the entity wants to claw back.
Interestingly, Bankman complained that FTX did not compensate him well and threatened SBF to his mother, Barbara. Notably, FTX had agreed on a $200k annual salary for Bankman but he wanted the exchange to pay five times higher for his legal services despite being described as pro bono.
SBF's father was unhappy with his salary at FTX US so he emailed SBF asking for more money, and then pulled the "I'm telling your mother" Dad move and looped SBF's mom into the email thread pic.twitter.com/jJaHFqpI7Z
— Conor (@jconorgrogan) September 19, 2023
In the subsequent months, the legal action highlighted that SBF gifted the parents with tens of millions of dollars in cash and properties in the Bahamas.
“Within two weeks, Bankman-Fried gifted Bankman and Fried together $10 million in funds originating from Alameda Ltd. Within three months, Bankman-Fried caused the couple to be deeded a $16.4 million property in The Bahamas paid for with funds ultimately provided by FTX Trading,” the legal action noted.
What’s Next
FTX recently received a green light from the court to liquidate its crypto holdings amounting to about $3.4 billion to repay the distressed debtors. Notably, the crypto exchange only recovered about $5.5 billion with most of the $32 billion lost during the SBF tenure. For instance, SBF is said to have issued former FTX employees loans and also funded the Alameda Research risky bets.
Moreover, Alameda Research is said to have helped facilitate the donation of more than $100 million during the 2022 US elections. Already, the current FTX officials have filed for an action to claw back most of the funds but this may result in futile attempts.
Meanwhile, the SBF trial is set for early next month, where the ultimate fate of the former crypto king will be determined by a jury.