Futures Exchange (FTX) has sued the parents of its founder, Sam Bankman-Fried, for allegations of using the company to enrich themselves at the expense of the company's customers.
According to its CEO John Ray III, Joseph Bankman and Barbara Fried, among other insiders, have been benefiting from their son running FTX like a "family business."
Bankman-Fried initially pleaded not guilty to charges of defrauding FTX customers by using their funds to prop up his own risky investments. Despite this, he has been detained ahead of a trial scheduled to begin on October 3.
Other former FTX executives have also pleaded guilty to criminal charges, Reuters reported.
Read Also: [Timeline] The Rise and Fall of FTX Chief Sam Bankman-Fried
The Family that Scams Together?
FTX's lawsuit alleged that Bankman and Fried accepted a $10-million cash gift and a $16.4 million luxury property in the Bahamas from the firm, even as it was about to collapse. The company further alleged that the parents also pushed FTX to make tens of millions of dollars in charitable contributions, including to their alma mater, Stanford University.
Bankman, a tax specialist at Stanford Law School, often positioned himself as the "adult in the room" in a firm run by his son and other executives who were relatively young and with little to no management experience. However, the lawsuit added, Bankman "stayed silent" when he saw the warning signs of fraud and did little to prevent FTX's leadership from misappropriating customer funds.
Meanwhile, Fried was the strongest influence on FTX's political contributions, which caused her son and his fellow executives to directly contribute millions of dollars to a political action committee that she co-founded.
SBF's Legal Team Denies FTX's Embezzlement Claims
On the other hand, Bankman and Fried's attorneys, Sean Hecker and Michael Tremonte said in a joint statement that FTX's claims were "completely false" and the lawsuit a waste of funds that could be returned to the company's customers.
"This is a dangerous attempt to intimidate Joe and Barbara and undermine the jury process just days before their child's trial begins," the legal counsels said.
To date, FTX has recovered more than $7 billion in assets to repay customers and has been pursuing additional recoveries through lawsuits against FTX insiders and other defendants who received money from FTX before it went bankrupt.
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