FTX CEO Comes After SBF Parents

There’s a Rodney Dangerfield joke, “My high school was tough. After they sacked the quarterback, they went after his family.”

We’re now seeing a little bit of that toughness directed at Bankman, Fried and Bankman-Fried family members.

Over the weekend, a BusinessWeek cover story ran with the headline “How Sam Bankman-Fried’s Elite Parents Enabled His Crypto Empire.” The story itself was not so bad and there’s no smoking gun — it’s 5,000 words of high-powered parents advising their privileged son. Hardly surprising to anyone who’s followed this case or knew of his parents, whom BusinessWeek says, “both renowned Stanford scholars, [they] opened doors for their son and provided a halo effect for his company.”

But yesterday, another shoe dropped.

The debtors trying to salvage assets from FTX’s demise personally sued “Barb and Joe,” as Barbara Fried and Allan Joseph Bankman were known around the Stanford campus.

The lawsuit is worth reading in its entirety and some of its claims are deeply cringey. If true.

“Bankman authorized expenses to be paid by the FTX Group, such as $1,200 per night hotels for himself and plane tickets and tickets to the Formula 1 Grand Prix in France (what he called “a free trip to France”) for a student at Stanford Law School who later became outside counsel to the FTX Group. Bankman’s access and authority within FTX Trading, Alameda, Alameda Ltd., and FTX US gave him de facto officer, director, and/or manager status at each.”

Lots of dads give their sons advice on how to run their companies. Not so many have access to the company checkbook.

Or how about this gem:

“In February 2022, FTX Trading Head of Global Luxury Partnerships, while providing Bankman-Fried with pointers in advance of a meeting with Vogue’s Editor-in-Chief, recommended that he “mention the role your Dad and brother play behind the scenes supporting you at FTX and in Washington alike.”

Just in case you need the disgusting part said out loud, it’s the idea that a crypto exchange required a “Head of Global Luxury Partnerships.”

The charges against Ms. Fried are equally serious. Bear in mind that these are two of the most respected law professors at the country’s top-rated law school.

“Despite knowing or blatantly ignoring that the FTX Group was insolvent or on the brink of insolvency, Bankman and Fried discussed with Bankman-Fried the transfer to them of a $10 million cash gift and a $16.4 million luxury property in The Bahamas. Bankman and Fried also pushed for tens of millions of dollars in political and charitable contributions, including to Stanford University, which were seemingly designed to boost Bankman’s and Fried’s professional and social status at the expense of the FTX Group, and by extension, its customers and other creditors. Additionally, Fried, concerned with the optics of her son and his companies donating money to the organization she co-founded and other causes she supported, encouraged Bankman-Fried and others within the FTX Group to avoid (if not violate) federal campaign finance disclosure rules by engaging in straw donations or otherwise concealing the FTX Group as the source of the contributions.”

Straw donations are illegal—it can be a crime, not a civil matter. In July, six people were criminally charged in a straw donation scheme meant to benefit New York City mayor Eric Adams. So a civil lawsuit accusing a law professor—ie, someone who would know better — of activities that could be considered criminal is a big deal.

But it’s important to remember that this is a lawsuit—one side of the story. Same for the charges against Sam Bankman-Fried. We haven’t heard a defense yet. One of the most painful and unfair parts of the process, both civil and criminal, is that the accusations get months to harden in the public’s imagination before the counter story is even aired.

I don’t know Bankman, Fried or Bankman-Fried. I went by their house a few weeks ago but didn’t get the chance to meet them. If any of them broke the law or looted innocent account holders, I hope they’re held accountable. But I’m willing to keep an open mind until we hear both sides. That makes me a dinosaur. I’m OK with that.

One last funny detail.

The lawsuit takes a shot at Larry David. In noting that Bankman appeared in the famous Super Bowl commercial that FTX wasted millions on before imploding, the suit characterizes David—the creator of Seinfeld, creator and star of Curb Your Enthusiasm, star of Whatever Works and Fridays and so much more—as “Seinfeld writer Larry David.”

Pretty pretty pretty good.