SBF Lawyers Paid With Money that He Gifted to His Father
Sam Bankman-Fried’s (SBF) legal defense is funded by a gift to his father from a loan provided by Alameda Research.
The legal defense for Sam Bankman-Fried (SBF), founder of the now-defunct cryptocurrency exchange FTX, is being financed through funds he gifted to his father from a loan provided by FTX’s sister company, Alameda Research. Bankman-Fried is currently facing multiple criminal charges and an expensive legal battle.
In 2021, while serving as FTX’s CEO, SBF gifted a substantial sum to his father, Joseph Bankman, a Stanford Law professor. According to two sources with inside knowledge of both companies, the gift came from a loan from Alameda Research. SBF and co. are using those funds to pay for the legal fees, estimated to be tens of millions of dollars.
Allegations of FTX Customer Funds Misuse
Bankman-Fried is facing 12 criminal charges, including wire fraud, money laundering, securities fraud, and an additional bribery charge. He has entered a not-guilty plea for all charges. Additionally, the allegations involve the misuse of FTX customer funds via Alameda Research, dating back to the founding of the exchange in 2019. Around $10 billion in customer deposits were secretly redirected to Alameda by the former CEO. Moreover, these funds were intended for trading or custody on FTX between 2019 and 2022. FTX creditors argue that Bankman-Fried received $2.2 billion in company loans inappropriately and that $8.9 billion in customer deposits remain missing.
In 2021, SBF organized a monetary gift to his father, utilizing his lifetime estate and gift tax exemption, which allowed for a tax-free gift. At the time, he gifted the maximum allowed amount, $11.7 million. Furthermore, the funds went to Joseph Bankman after receiving a minimum of $10 million from Alameda Research.
Renowned Attorneys Defending Bankman-Fried
SBF’s defense team includes Mark Cohen and Christian Everdell of Cohen & Gresser, both former federal prosecutors. Moreover, they were part of the defense team for Ghislaine Maxwell, convicted in 2021 of sex trafficking a minor. David W. Mills, a criminal defense attorney, and close family friend is also offering pro bono advice to Bankman-Fried.
Joseph Bankman, a tax law expert and clinical psychologist, has not responded to inquiries from the media. Last month, he and his wife, retired Stanford Law professor Barbara Fried, received subpoenas from FTX attorneys requesting personal financial statements and records of any assets transferred to them by FTX companies or employees.
Parents Offer Financial Support
SBF’s parents have extended their financial support to their 31-year-old son. In December, they used their $1.8 million home in Stanford, California, to secure a $250 million bail package after authorities released SBF on a personal recognizance bond. His legal team has also requested that federal prosecutors grant him access to 56 million Robinhood shares he acquired in 2022 with funds lent by Alameda. Authorities seized these shares, worth $485 million, in January based on allegations that acquired them with illicit customer funds.
His attorneys also petitioned the Delaware bankruptcy court for financial aid, requesting the permission of SBF to use millions of dollars in coverage from FTX’s insurance policies to help finance some of his legal expenses.
Now, SBF faces additional charges after a pretrial conference scheduled for Thursday. The charges include allegations that he conspired to bribe Chinese government officials in 2021 with $40 million in cryptocurrency. He pleaded not guilty.
FTX’s Current Leadership and Legal Costs
FTX is now under the leadership of John J. Ray III, a seasoned corporate restructuring expert who has reportedly charged the company $690,000 for two months of work. Moreover, legal and advisory teams working on the bankruptcy proceedings have reportedly billed FTX a combined $38 million in expenses.
Since his arrest in the Bahamas in December, Bankman-Fried’s estimated net worth of $26.5 billion vanished since his wealth came mostly from FTX and its FTT tokens. In a recent development, the U.S. Attorney’s Office for the Southern District of New York has reportedly demanded that lawmakers who received donations from Bankman-Fried return them to the U.S. Marshals Service.
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