Sam Bankman-Fried is paying his defense lawyers with $10 million of misappropriated FTX funds, lawsuit says
- Sam Bankman-Fried is set to go on trial in October to face eight criminal charges.
- But the FTX founder has lost much of his fortune, once worth billions of dollars.
Sam Bankman-Fried is paying for his criminal defense lawyers with millions of dollars misappropriated from FTX, according to a complaint filed by the company.
The crypto exchange imploded last November after a CoinDesk report prompted customers to withdraw their deposits, but FTX didn't have enough money to fulfil demand — partly due to lavish spending by executives.
Bankman-Fried handed over the CEO role to attorney John J. Ray III who then entered FTX into Chapter 11 bankruptcy proceedings.
And now SBF is living under house arrest at his parents' California home, ahead of a trial on October 2 which will see him face eight criminal charges — including securities fraud and money laundering. Bankman-Fried has pleaded not guilty.
Since the FTX founder has lost much of his fortune, questions have been raised as to how he's been funding his defense.
Forbes reported in March that Bankman-Fried was getting the money from his father, Stanford professor Joe Bankman, after gifting him $10 million from the company.
And that's what FTX lawyers are now alleging the crypto exchange's founder did, referring to it as the "Bankman Gift Transfer."
The complaint says Bankman-Fried transferred $10 million from an FTX US exchange account to one in his own name, and then gave that same sum to his dad's FTX account.
"On information and belief, Bankman-Fried's father has been using this "gift" to finance Bankman-Fried's criminal defense," the court document says.
About two-thirds of the money was transferred to his father's bank accounts, but a million dollars in his FTX account has disappeared due to crypto losses, according to the complaint.
A spokesperson for Bankman-Fried did not immediately return Insider's request for comment, sent outside US working hours.