Sam Bankman-Fried’s Parents Request Dismissal of FTX Clawback Lawsuit
In Brief
SBF’s parents are seeking the dismissal of a clawback lawsuit filed by FTX, denying any involvement in the misconduct at FTX.
Parents of FTX’s former CEO Sam Bankman-Fried (SBF) are seeking the dismissal of clawback lawsuit filed by FTX, denying the allegations that suggest their awareness of issues and rejecting accusations of involvement in the misconduct at the company.
Their stance is rooted in the assertion that they neither had knowledge of the problems nor intentionally derived benefits from any wrongdoing at the firm.
In a court filing dated January 15, legal representatives for Joseph Bankman and Barbara Fried asserted that the lawsuit brought forth by FTX aimed to exploit the simple fact of their parental relationship with the former FTX chief executive officer.
The lawsuit brought forth by FTX in September alleged that Bankman and Fried leveraged their access and influence within the FTX enterprise to benefit themselves, supposedly at the expense of the debtors within the FTX bankruptcy estate. Contrary to these claims, Bankman and Fried have denied the allegations, contending that a significant portion of the accusations relies on their familial relationship with their son.
Legal representatives have rejected the claim that Bankman maintained a fiduciary relationship with FTX and operated as a de facto director. They argue that even if one were to hypothetically assume the existence of a fiduciary relationship, the plaintiffs have not sufficiently put forth credible allegations of a breach.
“Mere conclusory allegations are insufficient to state a plausible claim for relief. The complaint must contain sufficient facts allowing the court to draw the reasonable inference that the defendant is liable for the misconduct alleged,” lawyers claimed.
Similar arguments were raised in defense of Barbara Fried, the mother of Sam Bankman-Fried. These arguments suggest a deficiency in substantial allegations regarding an underlying breach and the actual awareness of any misconduct on her part. It is asserted that the claims against Bankman and Fried should be dismissed in accordance with Federal Rule of Civil Procedure 12(b)(6) and Federal Rule of Bankruptcy Procedure 7012(b) due to the inadequacy in formulating a viable legal claim.
FTX had been undertaking continuous endeavors to reclaim both funds and gifts from the pair in question.
According to FTX’s complaint, SBF’s parents received a $10 million cash gift and gained possession of a luxury property in the Bahamas, appraised at $16.4 million. Additionally, FTX asserts that they played a role in orchestrating a $5.5 million donation to Stanford University and a minimum of $10 million to Fried’s political action committee.
The legal representatives for Bankman and Fried contend that neither a $10 million cash gift nor the Bahamas property, referred to as the “Blue Water,” aligns with any assertion of “self-interest.” They argue that the Blue Water property served as a business location for FTX employees, and the $10 million transfer was a gift disbursed from Sam Bankman-Fried’s personal account during a period when the company held a valuation in the realm of “billions of dollars.”
Legal Landscape Shifts in Sam Bankman-Fried Case
In November, Bankman-Fried was convicted on charges of fraud and conspiracy. Prosecutors alleged that he misappropriated $8 billion from FTX customers. Subsequently, several other individuals within the company pleaded guilty to charges related to fraud and the making of unlawful political donations.
FTX has initiated multiple legal actions against former insiders and business partners in an endeavor to recuperate funds for compensating defrauded customers. As of its bankruptcy filing, FTX has successfully recovered assets exceeding $7 billion.
Recently, the United States prosecutors, under the leadership of Damian Williams, have chosen not to pursue the outstanding charges against Sam Bankman-Fried (SBF). These charges encompassed allegations of foreign bribery, bank fraud and other offenses. Furthermore, a charge linked to unlawful political donations, which had been separated from the initial indictment due to an extradition dispute with the Bahamas, has also been dropped.
Amidst the legal intricacies surrounding the FTX case, the shifting landscape adds further complexity to the unfolding narrative.
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Alisa is a reporter for the Metaverse Post. She focuses on investments, AI, metaverse, and everything related to Web3. Alisa has a degree in Business of Art and expertise in Art & Tech. She has developed her passion for journalism through writing for VCs, notable crypto projects, and scientific writing. You can contact her at alisa@mpost.io
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Alisa is a reporter for the Metaverse Post. She focuses on investments, AI, metaverse, and everything related to Web3. Alisa has a degree in Business of Art and expertise in Art & Tech. She has developed her passion for journalism through writing for VCs, notable crypto projects, and scientific writing. You can contact her at alisa@mpost.io
