Joseph Bankman and Barbara Fried, the parents of former FTX CEO Sam Bankman-Fried, are seeking to have the bankrupt crypto exchange's lawsuit against them dismissed.
In a January 15 filing, lawyers for the pair argued that the FTX estate's case was "threadbare" and that it is based on "the sheer fact that Defendants’ son was a founder and executive of the Debtor entities."
The estate of FTX sued Bankman and Fried in September 2023, aiming to recover "millions of dollars in fraudulently transferred and misappropriated funds" allegedly taken by the couple. The lawsuit also seeks to recover damages attributed to breaches of fiduciary duties and other alleged misconduct.
In the January 15 filing, Bankman and Fried's lawyers argue that, "neither Defendant ever held an executive role of any sort" at the exchange, and therefore no breach of fiduciary duty took place.
The pair's lawyers further argue that the estate needs to plead "specific facts showing actual knowledge that a defendant knew certain actions would result in a breach of fiduciary duty," and that it is not enough to plead that Bankman and Fried "knew or should have known."
While Bankman had no formal role at FTX, a September 2023 Bloomberg article reported that he attended meetings in which tax issues and the development of marketing materials for the exchange's FTT token were discussed.
Among the funds allegedly mismanaged by Bankman-Fried are a $10 million gift to his father, according to a July 2023 lawsuit brought by FTX’s current management. In the January filing, Bankman and Fried's lawyers argue that the $10 million gift "came directly from Mr. Bankman-Fried’s own, personal account," and that at the time it was sent, the exchange was considered "not only solvent, but also extremely successful."