Sam Bankman-Fried’s parents seek dismissal of FTX

FTX SAM 2024-01-17 96


The parents of former FTX CEO Sam Bankman-Fried are seeking to have FTX’s lawsuit against them dismissed, rejecting claims they knew about the problems at the crypto exchange and benefitted from misconduct at the firm.

According to a Jan. 15 court filing, lawyers representing Joseph Bankman and Barbara Fried argued that FTX’s lawsuit sought to “capitalize on the sheer fact” that they were the parents of the former FTX CEO.

The FTX lawsuit alleges that Bankman and Fried exploited their access and influence within the FTX empire to enrich themselves at the expense of the debtors in the FTX bankruptcy estate.

However, Bankman and Fried have denied the claims, arguing that much of the claims were based on their relationship with their son.

“That relationship is not actionable,” argued attorneys from Montgomery McCracken Walker & Rhoads.

The lawyers have rejected the claim that Bankman had a fiduciary relationship with FTX and served as a defacto director but said that even if there was a fiduciary relationship, the plaintiffs have failed to plausibly allege 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,” they argued.

Similar arguments were posted for Sam Bankman-Fried’s mother, Barbara Fried — arguing there was a failure to allege an underlying breach and actual knowledge of any misconduct.

“The claims against Mr. Bankman and Ms. Fried should be dismissed pursuant to Federal Rule of Civil Procedure 12(b)(6) and Federal Rule of Bankruptcy Procedure 7012(b) for failure to state a claim.”

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For months, FTX has been trying to claw back millions of dollars in cash and gifts from the pair, including a $16.4 million villa in the Bahamas.

The crypto exchange filed a complaint against Bankman-Fried’s parents in September last year, alleging a mixture of a breach of fiduciary duty claims and fraudulent transfers.

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