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Cryptocurrency SBF family may testify

FTX founder Sam Bankman-Fried's family, including his mother Barbara Fried, could be compelled to answer questions about the company's financial dealings. (Photo by David Dee Delgado/Getty Images)

By Hannah Bryan Leaders Staff

Hannah Bryan

News Writer

Hannah Bryan is a news writer for Leaders Media. Most recently she was a reporter for the Sanilac County News...

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Jan 27, 2023

The FTX Family Affair Collapse

FTX is seeking a court order to compel Sam Bankman-Fried’s family members to answer questions about the family’s wealth and where it came from. 

Key Details

  • The parents and brother of the alleged FTX fraudster SBF could be forced to answer questions about the family’s finances under oath and provide financial documents related to FTX. 
  • In addition to SBF’s family, lawyers included top company executives in their court filing. 
  • FTX’s questions are part of an attempt for the company to find assets that can potentially be used to repay the billions of dollars owed to its creditors, including funds that SBF may have inappropriately distributed. 
  • According to the court filing, SBF’s parents—Joseph Bankman and Barbara Fried—were allegedly involved in FTX.
  • As a law professor at Stanford Law School, Bankman allegedly helped FTX secure its first lawyers and offered tax advice to employees. According to the filing, a political action committee that Fried allegedly founded may have received funds from FTX, Bloomberg reports.  
  • SBF’s brother Gabriel Bankman-Fried founded Guarding Against Pandemics, a nonprofit that operated from a multimillion-dollar Washington, D.C., property. 
  • The family members cannot be questioned until U.S. Bankruptcy Judge John Dorsey approves the request. 

Why it’s news

Since SBF stepped down as CEO and FTX filed for bankruptcy, the company has been desperately searching for any assets available to pay back its debts. SBF continues to insist that the company has funds. In a statement on Substack, SBF claimed that his former company “was and is solvent.”

In the same statement, SBF claimed that FTX US could still have “hundreds of millions of dollars in excess of customer balances.” After FTX filed for bankruptcy, the company said that “there is a substantial shortfall of digital assets at both,” referring to FTX US and FTX.com.

So far, FTX Debtors has found around $5.5 billion in liquid assets within the company. The funds are made up of $1.7 billion in cash, $3.5 billion crypto, and $300 million in securities, Bloomberg reports. Around $413 million was transferred by unauthorized third parties, FTX Debtors claim. The unauthorized transfers likely occurred during a hack just after FTX declared bankruptcy. 

Backing up a bit

In the months since the dramatic collapse of one of the world’s largest cryptocurrency exchanges, SBF has admitted to making mistakes but not to criminal activity. 

The former CEO admitted that the company should have provided more customer protection and focused on risk management. He also acknowledged that FTX and Alameda Research should not have been as closely connected as they were. 

SBF further claimed that he “didn’t ever try to commit fraud.”

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