FTX Lawsuit: Sam Bankman-Fried's Parents Request Court Dismissal

• Legal Battle Involving Parents of Sam Bankman-Fried and FTX
• Recovery of Alleged Fraudulent Funds
• Arguments by Bankman and Fried
• Need for Actual Knowledge
• FTX's September 2023 Lawsuit

Legal Battle Involving Parents of Sam Bankman-Fried and FTX

In a recent development, Joseph Bankman and Barbara Fried, parents of Sam Bankman-Fried, have filed a request for the dismissal of a lawsuit brought against them by the now insolvent cryptocurrency exchange, FTX$3.28 -5.38%. The exchange claims the pair were involved in fraudulent fund transfers.

Recovery of Alleged Fraudulent Funds

FTX commenced legal action in September 2023 against Bankman and Fried, purportedly to recover a substantial sum of funds. Not long after, in less than two months, their son, Sam Bankman-Fried, was found culpable of all seven charges related to customer and state fraud. His sentencing is slated for March.

Arguments by Bankman and Fried

Both Bankman and Fried, esteemed professors at Stanford Law School, have contested the charges. They contend that no fiduciary relationship existed between Bankman and FTX, asserting that he did not hold a position as a director, officer, or manager. They further argue that even if such a relationship were to exist, FTX would need to demonstrate a plausible breach, as per their January 15 court filing.

Need for Actual Knowledge

In a noteworthy argument, the court filing posits that FTX's claim that the parents "knew or should have known" is insufficient. It asserts that FTX should present specific facts demonstrating "actual knowledge" that the parents were aware that certain actions would lead to a breach of fiduciary duty.

FTX's September 2023 Lawsuit

In the lawsuit filed by FTX in September 2023, the exchange did not disclose the total sum that Bankman and Fried are alleged to have misused. However, the filing does cite specific line items, including an annual salary of $200,000 received by Bankman for his role as a senior adviser to the FTX foundation, more than $18 million for a property in the Bahamas, and $5.5 million in FTX Group donations made to Stanford University, which the University has pledged to return.

Edited by Jonathan Stoker