The legal battle intensifies as Bankman-Fried’s parents counter FTX’s claims.

In a legal battle that could set a precedent for the cryptocurrency world, Joseph Bankman and Barbara Fried, parents of FTX founder Sam Bankman-Fried, have asked a U.S. bankruptcy judge to dismiss a lawsuit filed against them by bankrupt cryptocurrency exchange FTX. . The lawsuit, filed in September 2023, accuses Bankman and Fried of enriching themselves at the expense of FTX’s debtors. FTX claims the couple took advantage of their access and influence within the FTX empire, but Bankman and Fried deny these claims and claim their relationship with their son makes them legally unsuitable.

Claims and Counterclaims

FTX’s lawsuit lacked specifics about the sums Bankman and Fried allegedly misused, but did mention details such as Bankman’s salary, real estate purchases, and donations to Stanford University. Stanford has pledged to return donations it received from FTX Group. Bankman and Fried’s legal team at Montgomery McCracken Walker & Rhoads disputed the lawsuit’s claims, citing detailed accusations and asserting a higher burden of proof. They questioned the legal basis of the parent-child relationship giving rise to liability, arguing that there was no fiduciary relationship between them and FTX and that they held no official position.

National Defense Strategy and Implications

The defense strategy centers on the lack of evidence holding Bankman and Fried liable for the alleged misconduct. They require FTX to provide specific facts demonstrating the parents’ “actual knowledge” of the tort and demand a higher burden of proof for FTX to meet in legal pursuits. This unfolding legal story is more than just a family affair. This is a battle that could set a precedent in the cryptocurrency world, and could impact how cryptocurrency exchanges and their affiliates are held accountable in the future.

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