According to Bloomberg, Sam Bankman-Fried’s father, not limited to his appearance alongside comedian Larry David in an FTX commercial, was more deeply involved in the matter.
By Pradeep Saran
16 September 2023, 02:05 PM
FTX founder Sam Bankman-Fried’s father, Joseph Bankman, was reportedly involved in meetings related to the development of marketing materials for FTT, the cryptocurrency linked to the exchange’s collapse in November. This information comes from Bloomberg, which cited invoices from the law firm Fenwick & West. The law firm had been hired by Alameda Research, FTX’s sister company.
This development is intriguing because it contrasts with the FTX founder’s earlier indications that he might rely on an “advice-of-counsel” defense during his upcoming trial. This defense hinges on the claim that Bankman-Fried received assurances from lawyers overseeing FTX, suggesting a lack of criminal intent. While Bankman is not explicitly mentioned in the court filing outlining this defense strategy, it is reported that Bankman-Fried’s father, an expert in tax law and a professor at Stanford Law School, provided extensive advice to his son on legal matters even before FTX’s launch.
Bankman-Fried and several FTX insiders have been accused of misappropriating customer funds worth billions of dollars, alleged to be one of the largest fraud cases in American history. Bankman-Fried has pleaded not guilty to charges that include fraud and money laundering.
According to a source familiar with FTX’s operations, Bankman played a significant role in the exchange’s decision to relocate its headquarters from Hong Kong to the Bahamas.
Furthermore, a lawsuit filed by FTX’s current management in July claims that funds allegedly mismanaged by Bankman-Fried, including a $10 million gift to his father, were used to support his son’s legal defense. Despite having no formal role within the company, Bankman-Fried’s father made an appearance as a “U.S. founding father” in an FTX commercial during the 2022 Super Bowl, countering comedian Larry David’s critique of the U.S. Constitution.
Before FTX faced its downturn, Alameda’s operations were reportedly backed by FTT. The exchange token’s value plummeted after Binance CEO Changpeng Zhao announced the liquidation of Binance’s FTT holdings, and the situation worsened when Binance backed out of a potential buyout of FTX. As customers rushed to withdraw their funds from the struggling exchange, FTX was unable to meet withdrawal demands, ultimately leading to its bankruptcy. The exchange’s admission that it did not hold one-to-one assets of customer reserves was a crucial factor in its downfall.