San Francisco, California – Joseph Bankman and Barbara Fried, parents of Sam Bankman-Fried, are seeking the dismissal of a lawsuit filed by bankrupt cryptocurrency exchange FTX. The exchange alleges that funds were fraudulently transferred and seeks to recover millions of dollars from Bankman and Fried.
Bankman-Fried, less than two months after the lawsuit was filed, was found guilty on all seven charges of defrauding customers and the United States. His sentencing is expected to take place in March.
Bankman and Fried, both professors at Stanford Law School, argue that Bankman had no fiduciary relationship with FTX and did not hold any position of authority within the company. They contend that even if a fiduciary relationship existed, there is no plausible breach.
The court filing by Bankman and Fried emphasizes the need for FTX to present specific evidence demonstrating “actual knowledge” and intent on the part of the parents to breach their fiduciary duties. Mere allegations of “knew or should have known” are deemed insufficient.
In the original lawsuit filed by FTX in September 2023, the total amount misappropriated by Bankman and Fried was not disclosed. However, details were given regarding certain transactions, including Bankman’s annual salary of $200,000 as a senior advisor to the FTX foundation, the purchase of a property in the Bahamas worth over $18 million, and FTX Group donations totaling $5.5 million to Stanford University. Stanford University has since announced that it will be returning these donations.
The outcome of this case will have far-reaching implications for both the cryptocurrency industry and the legal responsibilities of individuals associated with cryptocurrency exchanges. As the trial unfolds, legal experts anticipate further scrutiny of fiduciary duties within the cryptocurrency ecosystem.