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 .

AccessTimeIconJan 17, 2024 at 6:55 a.m. UTC
Updated Mar 8, 2024 at 8:04 p.m. UTC

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.

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.

Edited by Parikshit Mishra.


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Amitoj Singh

Amitoj Singh is a CoinDesk reporter.