Sam Bankman-Fried’s parents want FTX’s clawback lawsuit dismissed
The parents of former FTX CEO Sam Bankman-Fried are seeking to have FTX's lawsuit dismissed, denying claims that they knew about the crypto exchange's problems and knowingly benefited from misconduct at the company.
According to a January 15 court filing, attorneys representing Joseph Bankman and Barbara Fried argued that FTX's lawsuit seeks to “establish a factual basis” that the former FTX CEO is the parent.
In September, FTX's lawsuit alleges that Bankman and Fried used their reach and influence in the FTX empire to enrich themselves through debtors in FTX's bankruptcy estate.
FTX founder Bankman-Fried sued parents
Bankrupt crypto exchange FTX on Monday sued the parents of founder Sam Bankman-Fried, Stanford professors Joseph Bankman and Barbara Fried, of using the company to enrich themselves at the expense of FTX customers.
FTX, now… pic.twitter.com/iZqbr4TUWq
— Cryptocurrency Hunter (@MoneyHunter369) September 20, 2023
However, Banman and Freed denied the claims, saying most of the claims were based on their relationship with their son.
“That relationship is not actionable,” argued Montgomery McCracken Walker & Rhodes attorneys.
The attorneys denied claims that Banman had a fiduciary relationship with FTX and served as a de facto director, but said that despite the fiduciary relationship, the plaintiffs failed to allege infringement.
“Conclusory allegations are insufficient to state a plausible claim for relief. “The petition must contain sufficient information to enable the court to obtain sufficient information that the defendant is responsible for the crime,” they argued.
Similar arguments have been posted for Sam Bankman-Fried's mother, Barbara Freed – arguing that there is a fundamental violation and lack of actual knowledge of any conduct.
“The claims against Mr. Bankman and Ms. Fried must be dismissed for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6) and Federal Bankruptcy Code 7012(b).”
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For months, FTX has been trying to recoup millions of dollars in cash and gifts from the couple, including a $16.4 million villa in the Bahamas.
Lawyers for Bankuman and Freed argued that neither the $10 million cash gift nor the “blue water” property in the Bahamas satisfied the “personal gain” charge because the property was used by FTX employees as a place of business, and the $10 million transfer in 2011. Sam Bankman-Fried's private label paid gift, when the company was valued and valued at “billions of dollars.”
“This, they argue, negates any conclusion that the gift may have been motivated by “self-interest” on the part of Mr. Bankman.
The crypto exchange filed a complaint against Bankman-Fried's parents alleging breach of fiduciary duty claims and fraudulent transfers.
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