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Sam Bankman-Fried’s parents have filed a motion to dismiss FTX’s lawsuit, denying involvement in the exchange’s downfall.
Months after the dramatic implosion of crypto exchange FTX, Joseph Bankman and Barbara Fried are embroiled in a legal battle, facing accusations of complicity in their son’s alleged financial misdeeds.
In September 2023, FTX, now under new management, initiated a lawsuit against the FTX founder’s parents, alleging their involvement in widespread financial misconduct at the company. Central to FTX’s claim is the pursuit of millions of dollars they allege were misappropriated by the couple, including a $10 million gift to Joseph Bankman.
However, the defense mounted by Bankman and Fried’s legal team has labeled the lawsuit as “threadbare,” basing their argument on the fact that their involvement is assumed purely because of their relation to their son. The primary defense hinges on the assertion that neither had official roles within FTX, negating the possibility of breaching fiduciary responsibilities.
The motion to dismiss filed by Bankman and Fried’s legal team adds complexity to the ongoing legal dispute between FTX and its founder’s family. The court’s decision on whether to uphold the lawsuit or dismiss it based on the arguments presented by the defense will be a significant milestone in this case.
The disputed $10 million gift
Adding complexity to the case, the defense challenges the claim of misappropriated funds, asserting that the $10 million gift originated from Joseph Bankman’s personal finances, not from the coffers of FTX. This point is further bolstered by their claim that at the time of this transfer, FTX was solvent and performing well, countering any insinuation of financial distress at the exchange.
Despite the lack of formal roles within FTX for Bankman and Fried, reports suggest they may have had an informal hand in some of the exchange’s key decisions. A 2023 Bloomberg article referenced their presence at meetings discussing tax strategies and marketing for the FTX Token (FTT), hinting at a possible deeper involvement and awareness of the company’s inner workings.