Stanford Returns FTX’s Millions Following Suit Against SBF Parents

Stanford University reportedly intends to give back millions of dollars given to it by FTX.

“We have been in discussions with attorneys for the FTX debtors to recover these gifts and we will be returning the funds in their entirety,” a spokesperson for the California school told Bloomberg News Tuesday (Sept. 19).

This followed a new lawsuit accusing the parents of FTX founder and alleged fraudster Sam Bankman-Fried of using their ties to their son’s company and their status as Stanford law professors to help “enrich themselves.”

Included in the allegations in the suit are claims that Stanford received $5.5 million in gifts from FTX and associated companies in the year leading up to the crypto exchange’s collapse.

“Stanford received gifts from the FTX Foundation and FTX-related companies largely for pandemic-related prevention and research,” the Stanford spokesperson said, per Bloomberg.

The report also quotes attorneys for Joseph Bankman and Janet Fried, calling the allegations in the suit “completely false.” Their son is set to begin trial next month in what prosecutors have labeled one of the largest fraud cases in U.S. history. Bankman-Fried has pleaded not guilty.

The suit against Bankman-Fried’s parents, filed earlier this week by the bankrupt FTX, aims to recover millions in “fraudulently transferred and misappropriated funds.”

It alleges that Bankman-Fried’s parents were given a luxury property in the Bahamas worth nearly $19 million using company funds, and that Joseph Bankman used his tax law expertise and “unique understanding of the FTX Group’s muddled corporate structure” to orchestrate a $10 million cash gift to himself and Fried.

“Bankman and Fried, tenured professors at what currently is ranked as the top U.S. law school, either knew — or ignored bright red flags revealing — that their son, Bankman-Fried, and other FTX Insiders were orchestrating a vast fraudulent scheme to profit and promote their personal and charitable agendas at the Debtors’ expense,” the suit says.

The suit comes as FTX’s new management continues to work to right the company, seeking to claw back funds handed out under Bankman-Fried’s leadership. 

Last week brought the news that the company was examining whether payments made to sports figures such as basketball legend Shaquille O’Neal and tennis star Naomi Osaka to promote the platform can be recovered.

Also last week, a bankruptcy court judge gave FTX permission to sell its cryptocurrency assets to repay customers in U.S. dollars. Under the plan, the company is allowed to sell up to $100 million in cryptocurrency per week, and can enter hedging and staking agreements to reduce the threat of price volatility and earn passive income on more mainstream crypto assets such as bitcoin and ether.