Former head now-bankrupt of the FTX exchange, Sam Bankman-Fried (SBF), directed funds from a gift he had given his father, drawn from money borrowed from the platform, to cover legal costs. Forbes reports, citing informed sources.
The publication estimates that legal costs could run into the millions. His interests are represented by Mark Cohen and Christian Everdell of Cohen & Gresser, as well as criminal-defense attorney David W. Mills.
In 2021, SBF transferred $10 million to his father, Stanford law professor Joseph Bankman, using a loan facility tied to Alameda Research. The former CEO used the lifetime gift exemption of $11.7 million as of 2022.
“Having received at least $10 million, SBF sent the funds to his father, using his lifetime exemption from estate and gift taxes — effectively a tax-free gift,” — one of the sources said.
Bankman-Fried was required to report this in his U.S. IRS filing.
Joseph Bankman and Barbara Fried — SBF’s parents and a retired Stanford Law professor — received subpoenas from FTX’s lawyers. They demanded personal financial statements and records of any assets transferred to them by the companies or employees within the group of companies linked to his son.
Forbes could not confirm how much Bankman-Fried spent on legal services.
The publication noted that his parents used their own assets to support their son financially. They provided a large portion the collateral of $250 million, including their Palo Alto home valued at $1.8 million, as collateral.
In January 2023 it emerged that U.S. federal prosecutors seized assets worth $697 million from Bankman-Fried.
The sum consists largely of 55.2 million Robinhood shares, which are valued at about $485 million currently. The list also includes three Silvergate Bank accounts with more than $6 million in the name of the Bahamian subsidiary FTX Digital Markets. A further nearly $50 million were held at Moonstone Bank.
After the arrest in the Bahamas and extradition to the United States, where SBF was released on bail of $250 million, he said he had less than $100,000 in his personal accounts.
According to the March court presentation, FTX’s aggregate shortfall of assets to cover customer claims stood at $8.7 billion. The amount paid or loaned to the so-called Bankman-Fried inner circle amounted to $3.2 billion, including $2.2 billion for him personally.
In December 2022, the U.S. Department of Justice charged the former FTX chief with eight counts. In February 2023 prosecutors increased the number of charges against Bankman-Fried to 12, and in March to 13.
He has not pleaded guilty to any of the charges. A trial was scheduled for October 2023.
In March, Bankman-Frieddemanded that FTX pay his lawyers’ fees from the company’s funds, funded by the gift to his father — see страховки ответственности руководства.
On March 28, the court approved new terms for SBF’s bail.
Earlier, experts estimated the costs for the company’s bankruptcy legal services at $20 million.