Sam Bankman-Fried’s parents say they can’t be held accountable for their son’s actions at FTX.
Joseph Bankman and Barbara Fried were sued last year by FTX, with the bankrupt cryptocurrency exchange alleging that the pair used their backgrounds as Stanford University law professors to enrich themselves as their son carried out his own fraud during his time as CEO of the company.
But in a court filing Monday (Jan. 15), Bankman and Fried call the company’s claims “threadbare” and “conclusory” and ask for the suit to be dismissed.
“Reading between the lines, plaintiffs seek to capitalize on the sheer fact that defendants’ son was a founder and executive of the debtor entities,” the lawsuit says. “That relationship is not actionable. While plaintiffs allege defendants interacted with the debtor entities in limited capacities, neither defendant ever held an executive role of any sort.”
The FTX lawsuit alleges that “Bankman’s command of tax law and unique understanding of the FTX Group’s muddled corporate structure allowed him to facilitate the transfer of a cash gift totaling $10 million to himself and Fried” using company money.
It adds that Bankman either knew or “should have known, the perilous financial state of the FTX Group, even as he moonlighted as an actor in a Super Bowl commercial and extracted millions of dollars from the FTX Group.”
Bankman and Fried contend that FTX cannot argue that Bankman-Fried’s parents “should have known” about their son’s actions, but rather that the company should produce specific evidence of that knowledge.
FTX filed for bankruptcy in November 2022 following the revelation that the company had used customer funds to rescue its sister firm Alameda Research, leading to an outpouring of funds as investors worried FTX did not have sufficient income to cover its debts.
Bankman-Fried was eventually charged with fraud and conspiracy related to the collapse, and convicted in November of last year. He is due to be sentenced in March and could receive a prison term that puts him behind bars for the remainder of his life.
Meanwhile, FTX continues to work to emerge from bankruptcy, though its plan to do so has apparently angered some investors.
That’s because the company hopes to repay them a cash sum based on the value of their investments at the time of the collapse. However, those investments would be worth much more in 2024, as the price of bitcoin has jumped considerably since the fall of 2022.