Saturday, February 24, 2024
Blockchain

Legal Battle Intensifies as Bankman-Fried’s Parents Counter FTX’s Allegations

In a legal battle that could set precedents in the cryptocurrency world, Joseph Bankman and Barbara Fried, the parents of FTX founder Sam Bankman-Fried, have asked a U.S. bankruptcy judge to dismiss the lawsuit filed against them by the bankrupt crypto exchange FTX. The lawsuit, filed in September 2023, accuses Bankman and Fried of enriching themselves at the expense of FTX’s debtors. FTX alleges that the couple exploited their access and influence within the FTX empire, but Bankman and Fried deny these claims, arguing that their relationship with their son is not legally actionable​​​​.

Claims and Counterclaims

FTX’s lawsuit lacked specifics on the total sum allegedly misused by Bankman and Fried but mentioned details like Bankman’s salary, property purchases, and donations to Stanford University. Stanford has committed to returning the donations it received from the FTX Group. Bankman and Fried’s legal team from Montgomery McCracken Walker & Rhoads challenges the lawsuit’s claims, insisting on detailed accusations and a higher burden of proof. They argue that there was no fiduciary tie between them and FTX and no official positions held, questioning the legal grounds of a parent-child relationship resulting in liability​​​​.

Defense Strategy and Implications

The defense strategy focuses on the lack of evidence to hold Bankman and Fried accountable for the alleged misconduct. They demand that FTX provide concrete facts proving the parents’ “actual knowledge” of wrongful acts and call for a higher burden of proof to be met by FTX in their legal pursuit. This unfolding legal saga is not just a family affair; it’s a battle that could set precedents in the crypto world, affecting how crypto exchanges and their affiliates are held accountable in the future​​.

Image source: Shutterstock

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