In a major legal move, bankrupt cryptocurrency exchange FTX has filed a lawsuit against the parents of its founder and former CEO Sam Bankman-Fried.
FTX Takes Legal Action Against Sam Bankman-Fried's Parents for Alleged Misappropriation of Funds
The lawsuit seeks to recover what FTX claims is “millions of dollars in fraudulently transferred and misappropriated funds.”
Although portions of the file have been suppressed, it expressly asks the court to award damages to FTX property, as well as the return of any property or payments previously made by FTX to Joseph Bankman and Barbara Fried.
In addition, punitive damages are requested, citing “conscious, intentional, immoral and malicious conduct”.
One example highlighted in the filing is the payment of over $18 million, including taxes and fees, for a property known as Blue Water.
This property was purchased by Bankman and Fried, and FTX covered various related expenses in excess of $90,000.
The filing also alleges that Bankman's sophisticated knowledge of tax law and the complex corporate structure of FTX Group, Alameda Ltd. He allegedly facilitated the transfer of a $10 million cash gift from his funds to himself and Fried.
The complaint alleges that Bankman and Fried, both law professors at Stanford Law School, used their expertise and legitimacy to enrich themselves at the expense of FTX Group.
It is also suggested that Bankman, with his extensive financial understanding, must have been aware of FTX Group's precarious financial situation.
*This is not investment advice.
The clawbacks have begun.