In a legal battle that could set a precedent in the cryptocurrency world, Joseph Bankman and Barbara Fried, the parents of FTX founder Sam Bankman-Fried, he asked a US bankruptcy judge to dismiss the lawsuit filed against them by the failed crypto exchange FTX. The lawsuit, filed in September 2023, accuses Bankman and Fried of enriching themselves at the expense of FTX’s debtors. FTX claims the couple used their access and influence in the FTX empire, but Bankman and Fried deny these claims, saying their relationship with their son is not actionable.
Claims and Counterclaims
The FTX lawsuit lacked details on the total amount allegedly embezzled by Bankman and Fried, but did mention details such as Bankman’s salary, property purchases and donations to Stanford University. Stanford has committed to returning donations received from the FTX Group. Bankman and Fried’s legal team at Montgomery McCracken Walker & Rhoads disputed the lawsuit’s allegations, insisting on detailed allegations and a higher burden of proof. They argued that there was no fiduciary relationship between them and FTX and that they held no official positions, questioning the legal basis of the parent-child relationship giving rise to liability.
Defense Strategy and Implications
The defense strategy focused on the lack of evidence to hold Bankman and Fried accountable for the alleged wrongdoing. They demand that FTX provide specific facts proving the parents’ “actual knowledge” of wrongdoing and call on FTX to bear a greater burden of proof in prosecuting them. This unfolding legal saga is not just a family affair; it’s a fight that could set precedents in the crypto world, affecting how crypto exchanges and their affiliates will be held accountable in the future.
Image source: Shutterstock