Lawyers representing FTX Trading have initiated a lawsuit, asserting that the parents of the company’s founder, Sam Bankman-Fried, exploited their influence over their son to divert millions of dollars from the organization.

They are accused of channeling these funds into a luxurious Bahamas residence and directing contributions toward their favored causes and Stanford University.

The complaint, filed on Monday in the context of FTX’s bankruptcy proceedings in Delaware, seeks to recover damages attributed to the actions of Allan Joseph Bankman and Barbara Fried, which allegedly harmed the company.

FTX encountered financial distress in November, resembling a bank run in the world of cryptocurrency exchanges, the Associated Press reported.

Bankman-Fried, the founder, is facing charges of investor fraud, embezzlement of customer deposits for opulent real estate acquisitions, political campaign donations, and high-risk trades at Alameda Research, his cryptocurrency hedge fund.

His trial on federal fraud charges is scheduled to commence on October 3 in Manhattan. Several former FTX executives have already pleaded guilty to charges of fraud and conspiracy, cooperating with investigators in the process.

The lawsuit contends that both Bankman, a Stanford University law professor specializing in tax law, and Fried, a retired Stanford law professor, were implicated in the misconduct that led to FTX’s downfall, resulting in both criminal and civil inquiries.

Written by staff