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FTX has commenced legal proceedings against Alan Joseph Bankman and Barbara Freed, the parents of Sam Bankman-Freed, seeking substantial damages.
The embattled cryptocurrency exchange, along with Alameda Research, alleges that Sam Bankman-Fried's parents were involved in the fraudulent transfer and misappropriation of significant amounts of money during the early stages of FTX.
Earlier this year, FTX's legal team raised concerns that Sam Bankman-Freed had used donated funds for his father's legal defense.
As stated in the court statement as of September 18, FTX Trading is seeking reimbursement from Alan Joseph Bankman and Barbara Freed for direct and indirect transfers from FTX and its affiliates.
The lawsuit alleges that “Bankman-Freed's parents, Bankman & Freed, used their positions and influence with the FTX entity to directly and indirectly benefit themselves to the tune of millions of dollars while knowingly disadvantaged the debtors involved in these Chapter 11 cases, and their creditors".
According to the report, in his capacity as a consultant, Bankman played a key role in maintaining a culture of misrepresentation and significant mismanagement. He is also involved in efforts to protect the company and its insiders from accusations.
Bankman and Freed, the parents of Sam Bankman-Fried, have diverted millions of dollars from the FTX Group for personal gain. FTX is asking the court to hold them accountable for their actions and recover the assets on behalf of creditors.
According to the filing, FTX is bringing twelve counts against Bankman and Freed, including fraud, aiding and abetting, and breach of fiduciary duty. In addition, the Debtors have provided substantial evidence of transfers made for fraudulent purposes, including for personal gain, political contribution, and protection of domestic interests.