FTX debtors sue Sam Bankman-Fried's parents for misappropriation of funds

(Kitco News) - The debtors for the bankrupt FTX cryptocurrency exchange have filed a lawsuit against the parents of FTX founder and former CEO Sam Bankman-Fried (SBF), alleging that they misappropriated millions of dollars through their involvement in the exchange’s business.

Court documents filed on Monday by the law firm Sullivan & Cromwell show that the FTX debtors and debtors-in-possession are seeking to recoup funds given to SBF’s parents, Joseph Bankman and Barbara Fried, arguing that they exploited their access to their son’s business to enrich themselves at the expense of the debtors in the FTX bankruptcy estate.

“As Bankman-Fried’s parents, Bankman and Fried exploited their access and influence within the FTX enterprise to enrich themselves, directly and indirectly, by millions of dollars, and knowingly at the expense of the debtors in these Chapter 11 Cases and their creditors,” the filing said.

“Despite presenting itself to investors and the public as a sophisticated group of cryptocurrency exchanges and businesses, the FTX Group was a self-described ‘family business,’” they said. “It has since been revealed to have been fueled by fraud, perpetrated by and for the benefit of a group of insiders, including: Bankman-Fried, Daniel Friedberg, Zixiao “Gary” Wang, Nishad Singh, and Caroline Ellison.”