The quest to recover billions of dollars lost during the reign of Sam Bankman-Fried at FTX took another twist as the bankruptcy estate sued the parents for orchestrating fraud. The parents of the embattled crypto king are facing accusations of utilizing their influence within the collapsed FTX to enable Stanford University to receive a million-dollar donation.
The revelation prompted Stanford University to declare it would return the million-dollar gifts received from FTX at the request of Bankman-Fried’s parents. The institution admitted receipt of the gifts through the FTX Foundation and entities related to FTX to undertake pandemic-related prevention and research.
FTX Debtors Pursue Bankman-Fried Parents to Recover Donations
A Tuesday, September 19 publication by Fortune indicated that Stanford initiated a discussion with attorneys representing the FTX debtors. The institution confirmed plans to return the donation in its entirety.
The announcement by Stanford University comes a day following the lawsuit filed against parents of the FTX ex-boss. The Monday filing alleges Joseph Bankman and Barbara Fried leveraged their influence to realize personal gain.
The September 18 filing indicated that the parents, identified as Stanford Law School professors, utilized their influential roles to realize personal gain and channel million-dollar funds to relatives, friends, and entities. In particular, the estate’s counsel submitted that Bankman channeled over $5.5 million to Stanford in November 2021 and May last year.
Stanford University Benefited from FTX Group Funding
The filing illustrates that the donation by Joseph Bankman hardly benefits the FTX Group. Instead, the donation was naked self-dealing by the father. The filing indicates that Bankman aimed to extend favor and enrich Stanford, the employer, at the expense of FTX.
The filing submits that Bankman deployed creative channels to remit funds to Stanford University using the different FTX Group entities.
The filing indicates that Bankman had, on November 9, 2021, directed the FTX Trading and Alameda counsel on the capability of Paper Bird to donate $500,000 to Stanford University. He indicated the preference for Paper Bird since it could claim the deduction.
The filings further show the trail where the Paper Bird account was opened at Bank-4. The account would receive $1.5 million in funding from the FTX Trading account. On the same day, the account would remit $500,000 to the Stanford University account.
The Monday submission references the conversation dated February 2022. The conversation with the project officer at the FTX Foundation features the proposal to donate $4 million. The conversation identified the recipients as Stanford University professors and the pandemic preparedness fund at the medicine school.
Bankman termed the issue a no-brainer and supported formal discussion on the issue. He opposed violating donor rules and instead acknowledged the potential they had for Stanford that would turn dispositive. The proposed donation would be later executed in a Bitcoin transaction from the FTX account.
Bankman Orchestrated Multiple Channels to Fund Stanford
The filing indicates that Bankman would, in March 2022, propose a $1.5 million donation to the university. He directed the chief executive and project head at FTX Foundation to execute the transaction.
The conversations capture Bankman’s suggestion of getting a signatory from the Foundation who would then fund it. It portrays the intention of Bankman to comply with the standard approval procedure.
The submission by the estate counsel revealed that Bankman initiated a discussion with Alameda and FTX Trading’s general counsel regarding a $10000 sponsorship to the Stanford Blockchain Conference. The former crypto leader, now an industry villain, indicated the need to source funds from the FTX.US, not the FTX Foundation. He considered the amount as immaterial.
Bankman portrayed awareness of the potential concerns expressed by FTX Group regarding they were flowing to the employer. He admitted the need to distance from some donations as it indicated they were too close to the home.
Bankman-Fried had, in a December 2022 interview with the New York Times, dismissed his parents’ involvement in the FTX exchange business.
Editorial credit: Sergei Elagin / Shutterstock.com
Zone Crypto Invest provides exposure for numerous crypto businesses, and we invite you to join our community! Connect with us through our Telegram chat for any questions. Given the volatile nature of cryptocurrencies, always conduct thorough research before investing. Many articles on our website are sourced from guest writers or are paid content, and they might not reflect the views of Zone Crypto Invest's internal team. The opinions in these pieces may not always coincide with Zone Crypto Invest's stance. We do not vouch for the accuracy, quality, promotions, or any other aspects showcased on our platform. Please refer to our detailed terms of service and disclaimer for further information.