Sam Bankman-Fried’s parents who financially profited off his ‘web of deceit’ where he defrauded FTX customers out of $8 billion were a constant presence during his trial
Sam Bankman-Fried’s parents benefited financially from his “web of deceit,” defrauding FTX customers out of a total of $8 billion.
He committed one of the largest financial frauds in American history: using FTX customer deposits to back risky investments in the fledgling hedge fund Alameda, which was run with his ex-girlfriend Caroline Ellison.
The 31-year-old billionaire was convicted of two counts of fraud and five counts of conspiracy. He now faces a prison sentence of up to 110 years.
His parents, Joe Bankman and Barbara Fried, former professors at Stanford Law School, stood by him despite the allegations and were a constant presence during the high-profile trial that began on October 4.
It turned out that Bankman-Fried had given them cash, a house in the Bahamas and a $200,000 salary job at his company. While they helped post his $250 million bail, they paid his security and legal fees and allowed him to live in their home near campus while he was under house arrest.
Bankman-Fried’s parents arrived at Manhattan Federal Court on Wednesday to support their son
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Bankman-Fried’s FTX was worth $32 billion before its collapse last November and he was hailed as the future of finance, Steve Jobs of crypto.
But as prosecutors argued in court, he “lied to the world” because in reality he simply stole FTX customers’ money.
The “house of cards” collapsed last year amid falling crypto prices and media reports raising questions about how much of the $32 billion valuation was based on FTT, FTX’s native crypto token.
As customers attempted to withdraw their funds, the crypto equivalent of a run on a bank occurred, and FTX was shut down.
Bankman-Fried gave his parents Joe and Barbara $10 million, as well as a luxury condo in the Bahamas worth $16.4 million.
His father even quit Stanford and went to work for FTX for a salary of $200,000.
But Joe allegedly complained that this was a fraction of the $1 million he expected, according to court documents.
The Stanford University law professor complained that he was paid about $16,500 a month when he expected $80,000.
He took his complaint to his son, before involving his mother and telling him: ‘Gosh Sam, I don’t know what to say here.
‘This is the first (I) have heard of the 200,000 per year salary! I’m putting Barbara on this.’
Although Barbara “never had a formal position with the FTX Group.”
Weeks later, the couple received $10 million from Alameda Research, FTX’s sister hedge fund, also founded by their son, the lawsuit said.
While within three months they handed over the deed to a $16.4 million house in the Bahamas.
Joe and Barbara have been sued by the bankruptcy lawyers overseeing the company’s liquidation to recover the money paid to them.
FTX founder Sam Bankman-Fried was sworn in while testifying in his fraud trial on October 27
Bankman-Fried hangs his head in this court sketch after being handcuffed and taken into custody in August
Prosecutor Nicolas Roos used his closing arguments to tell the jury that the 31-year-old billionaire “thought he was smarter and better” and could get away with taking people’s money
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Lawyers claim Joe used fellow Stanford University law professor Barbara to “lobby” their son to increase their salaries.
Barbara is also accused of helping her son “avoid or even violate federal campaign finance disclosure rules” surrounding his political donations.
The couple is further accused of helping to cover up complaints from the crypto exchange’s former lawyer.
Meanwhile, Joe reportedly siphoned $5.5 million in donations to Stanford University to “ingratiate himself” with his employer, while “showering” his family and friends with gifts.
The prestigious university announced in September that it would refund the money from all donations raised by FTX and related companies.
A series of fraud and money laundering charges were brought against Bankman-Fried in December and his parents are said to have tried to find a way to pay his security and legal costs ahead of the trial.
They also reportedly bought him a German Shepherd puppy to cheer him up.
He said the money for his expensive legal defense came from the “multi-million dollar gift” he gave to his parents. Forbes.
He was released in December on a $250 million bond thanks to the help of his parents, who secured most of it at their property in Palo Alto, California.
Stanford scientists Larry Kramer, a former dean of Stanford’s law school, and Andreas Paepcke, a computer scientist at Stanford, have each signed guarantees worth $500,000 and $200,000.
Bankman-Fried was under house arrest at his parents’ home near the campus of Stanford University.
Prosecutor Roos accused Bankman-Fried of ‘celebrity chasing’ and showed jurors the famous photo of him at the 2022 Super Bowl with singer Katy Perry (left) and Orlando Bloom (second from left)
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But U.S. District Judge Lewis Kaplant revoked his bail in August after finding that the former billionaire likely tampered with witnesses at least twice.
His parents continued to show up at almost every court hearing to show their support.
Joe and Barbara are in the middle of a civil case against FTX’s current management, who have accused them of using company funds to enrich themselves and are trying to recover the money paid to them.
But the couple will not face criminal charges.
More than $7 billion of the money stolen by FTX has now been recovered, but those who lost won’t get it all back due to changes in the value of cryptocurrency between now and last November.