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Sam Bankman-Fried's Parents Ask Court to Dismiss FTX's Lawsuit Seeking to Recover Funds
Bankman and Fried, both professors at Stanford Law School, argued that Bankman did not have a fiduciary relationship with FTX .
Joseph Bankman and Barbara Fried, the parents of Sam Bankman-Fried, have asked a court to dismiss a lawsuit by the bankrupt cryptocurrency exchange FTX seeking to recover funds it alleges were fraudulently transferred.
FTX sought to "recover millions of dollars" from Bankman and Fried in September 2023. Less than two months later, their son, Bankman-Fried, was found guilty on all seven charges of defrauding customers and the United States. His sentencing is expected in March.
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Bankman and Fried, both professors at Stanford Law School, argued that Bankman did not have a fiduciary relationship with FTX and did not serve "as a director, officer, or manager," and even if a fiduciary relationship existed with FTX to plausibly allege a breach, according to a Jan. 15 court filing.
Significantly, the court filing argued that it is not enough for FTX to plead that the parents "knew or should have known." Instead, the filing argued that FTX should have produced specific facts showing "actual knowledge" that the parents "knew certain actions would result in a breach of fiduciary duty."
In the September 2023 lawsuit filing, FTX did not state the total amount Bankman and Fried may have misappropriated, but it did provide certain line items: Bankman received an annual salary of $200,000 for his role as a senior adviser to the FTX foundation, more than $18 million for the property in the Bahamas and $5.5 million in FTX Group donations to Stanford University, which the university has said will be returned.
Amitoj Singh
Amitoj Singh is a CoinDesk reporter focusing on regulation and the politics shaping the future of finance. He also presents shows for CoinDesk TV on occasion. He has previously contributed to various news organizations such as CNN, Al Jazeera, Business Insider and SBS Australia. Previously, he was Principal Anchor and News Editor at NDTV (New Delhi Television Ltd.), the go-to news network for Indians globally. Amitoj owns a marginal amount of Bitcoin and Ether below CoinDesk's disclosure threshold of $1,000.
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What to know:
- Ten major fintech and crypto trade associations have urged President Trump to stop big banks from imposing fees that could hinder innovation and competition.
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- The CFPB's open banking rule, which mandates free consumer access to bank data, is under threat as banks have sued to block it, and the CFPB has requested its vacatur.
