FTX Sues The Founder's Parents Regarding The Policy For Using Customer Funds

Stanford professor Joseph Bankman, the father of the founder of FTX. (photo: dock. special)

JAKARTA - The bankrupt US crypto exchange, FTX, on Monday 18 September, sued the founder's parent, Sam Bankman-Fried. They alleg that Stanford professors Joseph Bankman and Barbara Fried used the company to enrich themselves at the expense of FTX customers.

FTX, now led by change specialist John Ray, said that company founder Sam Bankman-Fried runs FTX as a "family business". He is accused of abusing billions of customer funds for the benefit of insiders' small circles, including his parents.

Sam Bankman-Fried has repeatedly pleaded not guilty on charges that he deceived FTX customers by using their funds to support his own risky investment. He is currently in prison ahead of a trial scheduled to start on October 3. Another former FTX executive has also pleaded guilty to criminal charges.

FTX sued that Bankman and Fried received cash prizes worth 10 million US dollars (Rp153.4 billion) and luxury properties worth 16.4 million US dollars (Rp251.7 billion) in the Bahamas from FTX, even as the company was about to go bankrupt. "Bankman and Fried also encouraged FTX to make charity donations of tens of millions of dollars, including to Stanford University," FTX said.

"Bankman-Fried's father, a tax specialist at Stanford's Legal School, often positions himself as an "indoor adult" in a company run by his son, who is now 31, and another executive with little management experience. But Bankman "stays silent" when he sees signs of a fraudulent device and doesn't do much to prevent FTX leadership from taking customer funds," the lawsuit said.

Fried is the biggest influence on FTX's political contribution, causing Bankman-Fried and other executives to donate millions of dollars directly to a political action committee he founded, according to FTX.

FTX filed for bankruptcy in November 2022 after claims that the company used and lost billions of dollars in customer crypto deposits.

FTX has recovered more than 7 billion US dollars (Rp107.4 trillion) in assets to pay customers, and is pursuing additional recovery through a lawsuit against FTX and other defendants who received money from FTX before going bankrupt.