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Joseph Bankman and Barbara Fried, parents of Sam Bankman-Fried, are actively seeking the dismissal of a lawsuit filed by the cryptocurrency exchange FTX.
In bankruptcy, the exchange aims to recover funds it alleges were fraudulently transferred. This legal battle comes from FTX's attempt to "recover millions of dollars" from Bankman and Fried in September 2023.
Interestingly, less than two months later, their son, Sam Bankman-Fried, faced legal consequences, being found guilty on all seven charges related to defrauding customers and the United States. His sentencing is scheduled for March.
Legal Defense Asserts Absence of Fiduciary Relationship
In their defense, Bankman and Fried, who serve as professors at Stanford Law School, argued in a court filing dated January 15 that Joseph Bankman did not maintain a fiduciary relationship with FTX. They emphasized that he did not hold director, officer, or manager positions. Even if a fiduciary relationship was assumed, the filing highlighted the necessity for plausible allegations of a breach.
A crucial aspect of the legal argument in the filing is that FTX's claims cannot solely rely on the assertion that the parents "knew or should have known." Instead, the filing underscores the importance of FTX presenting specific facts indicating "actual knowledge" on the part of the parents regarding actions that would lead to a breach of fiduciary duty.
Unveiling Details From FTX's Lawsuit Filing
FTX's September 2023 lawsuit did not specify the amount Bankman and Fried were accused of misappropriating. However, it did disclose certain line items, shedding light on financial transactions.
According to Coin Desk, Bankman received an annual salary of $200,000 as a senior adviser to the FTX foundation. Additionally, more than $18 million was attributed to acquiring property in the Bahamas, and $5.5 million constituted FTX Group donations to Stanford University, funds the university has committed to returning.
According to Crypto News, as this legal dispute unfolds, the intricacies of fiduciary relationships and the burden of proof surrounding knowledge become focal points in determining the viability of FTX's claims against Joseph Bankman and Barbara Fried.
The court will play a crucial role in evaluating the merits of this legal contest between the bankrupt cryptocurrency exchange and the parents of a notable figure in the crypto industry.
Photo by: Mariia Shalabaieva/Unsplash
