Key Takeaways
- In September, FTX initiated legal proceedings against Joseph Bankman and Barbara Fried.
- Bankman and Fried have denied having insider roles at FTX.
- The lawsuit by FTX is seeking to recover a $10 million gift, a property in the Bahamas, and various donations.
Former FTX CEO Sam Bankman-Fried’s parents are pushing for the dismissal of a lawsuit filed against them by the exchange.
They refute claims they were aware of issues within FTX and that they knowingly gained from wrongdoing at the company.
Parents of FTX’s Former CEO Fight Back Against “Unjust” Lawsuit
In a legal document , submitted on January 15, attorneys for Joseph Bankman and Barbara Fried claimed the lawsuit filed by FTX unjustly targets them simply because they are the parents of FTX’s former CEO.
The lawsuit, which was initially filed in September 2023, accuses Bankman and Fried of using their close connections and influence in FTX for personal gain. This, in turn, had a bad impact on FTX’s creditors.
FTX accuses Bankman and Fried of breaching fiduciary duties and engaging in fraudulent transfers.
Bankman and Fried have strongly refuted the accusations against them. They say the lawsuit largely hinges on their relationship with their son, Sam Bankman-Fried.
Their lawyers, from Montgomery McCracken Walker & Rhoads, emphasized that simply being related to their son is not legally actionable. They have dismissed the notion that Bankman had a fiduciary duty within FTX or acted as a de facto director. The attorneys argued that, even if such a relationship existed, the lawsuit fails to convincingly claim any breach of that duty.
Challenging Suit Vs. SBF Parents, Faulting Lack of Factual Evidence
The lawyers highlighted the need for more than just general allegations to establish a credible claim for legal action. They saided the complaint must present adequate factual details to reasonably suggest the defendants’ liability.
Barbara Fried’s legal defense argues the lawsuit does not successfully demonstrate her involvement in any breach . Neither, her lawyers says, does it show actual awareness of any wrongdoing within FTX.
Based on these arguments, the attorneys have requested the dismissal of the claims against Bankman and Fried. They cited the lawsuit’s failure to adequately state a valid claim.
Attorneys Dispute Factual Basis, Intent
FTX has been pursuing the recovery of millions of dollars from Joseph Bankman and Barbara Fried, including funds spent on a $16.4 million villa in the Bahamas.
Bankman and Fried’s lawyers have countered that the accusations related to a $10 million cash gift and the Bahamas property do not hold up under scrutiny. They argued the property was a business location by FTX employees. They also said the cash gift, which came from Sam Bankman-Fried’s personal account, was when the company was worth “billions of dollars.”
The attorneys maintained these factors undermine any claim of “self-interest” linked to Mr Bankman regarding the gift. They assert the transfer was a personal decision by Sam Bankman-Fried. This was detached from any self-serving motives on the part of his father.
The lawsuit represents part of the ongoing fallout surrounding the collapse of the crypto exchange and the intricate financial dealings of its key players.
