FTX Settlement with Founder’s Parents

According to a filing in the Bankruptcy Court for the District of Delaware, the estate of crypto exchange FTX has settled lawsuits against the parents of its founder, Sam Bankman-Fried (SBF).

The lawsuits, which were originally filed in February and largely overlooked, have been dismissed without prejudice.

Allan Bankman and Barbara Fried participated in critical aspects of the FTX business and its associated hedge fund, Alameda Research, which misappropriated funds from FTX customers. For years, their ultimate culpability for actions related to their son’s crimes remained uncertain.

Today, SBF is in prison serving a 25-year sentence, while his parents remain free. The US government has not publicly charged them with any crimes.

Million-Dollar Payments from FTX to SBF’s Parents

When John J. Ray III took over to manage the fallout from the FTX collapse in November 2022, a forensic analysis uncovered evidence of financial transactions involving SBF’s parents. It revealed millions of dollars in cash and real estate sent to them.

Allan worked as a fundraiser, part-time employee, and advisor for the trading giant, while Barbara also reportedly benefited from FTX’s payments in cash and real estate.

According to the filing, FTX settled its complaint against SBF’s parents “without prejudice.” This means while FTX does not plan to pursue litigation now, it retains the right to re-file in the future. Settlements marked “without prejudice” typically cannot be used as evidence in court, provided they are part of a genuine dispute resolution effort.