Sam Bankman Fried Family reportedly Involved in $100 million Financial Scandal

Sam Bankman-Fried, the founder of the now-defunct cryptocurrency exchange FTX, is at the center of a $100 million financial scandal involving the misappropriation of company funds for political contributions. 

SBF's family reportedly handled over $100 million in political contributions, according to emails that were recently disclosed by The Wall Street Journal (WSJ). 

A number of legal actions have resulted from the funds, which were purportedly obtained illegally from FTX customer funds and intended to influence the 2022 election. 

Emails revealing the role played by SBF's father, Joe Bankman, in advising financial strategies concerning political donations provided a detailed account of the family's involvement. Joe Bankman was reportedly directly involved in the illegal funding operations, according to emails obtained by the Wall Street Journal. 

It is alleged that SBF's brother, Gabriel Bankman-Fried, and mother, Barbara Fried, directed the flow of funds to different political organizations and causes. Funds allegedly went to progressive groups and initiatives through Barbara, a co-founder of the super PAC Mind the Gap, while donations to pandemic prevention efforts were channeled through Gabriel. 

Former Federal Election Commission chairman David Mason pointed out that Joe Bankman's involvement might put him directly in violation of campaign finance laws. 

Mason said that there was "strong evidence" in the emails that Joe Bankman was aware of "the illegal straw-donor scheme." A representative for Joe Bankman claimed to have "no knowledge of any alleged campaign finance violations" even with the evidence at hand. 

Bankman-Fried was taken into custody by Bahamian authorities in 2022 as a result of criminal charges brought by the US government. Following a month-long trial in New York, Bankman-Fried was found guilty on November 3, 2023, of fraud and money laundering. 

Sam Bankman-Fried was found guilty of defrauding his lenders, investors, and customers and was given a 25-year prison sentence. On March 28, 2024, Judge Lewis Kaplan presided over the federal court in Manhattan, where Bankman-Fried was sentenced. The 31-year-old crypto expert could have received a sentence of up to 110 years; however, the Bankman-Fried Attorney requested a sentence of six and a half years, while the prosecution argued for a sentence of 40 to 50 years. 

How it all started and why Sam Bankman-Fried's parents face legal trouble? 

Since the late 1980s, Barbara Fried and Joseph Bankman have been Stanford Law School lecturers. Joseph Bankman holds a doctorate in psychology, which he obtained towards the end of his career. According to the Pacific Anxiety Group, a practice in Northern California, Bankman is still associated with them and specializes "in the treatment of anxiety, depression, and adjustments in both teens and adults." Sam Bankman-Fried's father, along with his Yale Law School classmate Pam Karlan, co-hosted the "Stanford Legal '' talk show on SiriusXM for many years. 

In her own right, Sam Bankman-Fried's mother is a distinguished academic. Barbara Fried is well-known for her work on legal ethics; she chose to retire from teaching during the height of FTX's popularity. Throughout her academic career, Fried has challenged the views of prominent philosophers John Rawls and Robert Nozick regarding free will, having studied under and after them as an undergraduate and master student in the 1970s and 1980s at Harvard University. 

Additionally, she has written about how society views criminals. In a 2013 piece titled "Beyond Blame," she made the case that everyone is ultimately compromised. As a sort of second career, Joseph Bankman dabbled in psychotherapy in recent years, while Fried focused on poetry and short stories. Politics turned into yet another passion project for her, and she co-founded Mind the Gap, a nonprofit that has been described as "a secretive group led by Stanford University academics" that "has unleashed millions of dollars in political spending from Silicon Valley" in a Vox article. 

In order to devote all of his time to FTX, Joseph Bankman took a leave of absence from Stanford Law School in 2021. Bankman chose the locations and methods for FTX's charitable donations. According to reports, he repeatedly sent money to his employer, Stanford University. More than $5.5 million was raised by these donations. 

Barbara Fried "never had a formal position at the FTX Group," in contrast to Joseph Bankman, according to FTX's attorneys in their lawsuit. However, as they point out, she was one of the most influential advisors for the founder of FTX and the company's political contributions. Ahead of the 2022 midterm elections, Bankman-Fried became one of the most influential donors in the US by personally contributing about $40 million to political candidates, committees, campaigns, and causes. 

From that point on, Bankman-Fried has been accused by federal prosecutors of breaking campaign finance laws by obtaining some of his political contributions from anonymous "straw donors." Bankman-Fried's mother was cited by FTX's attorneys as evidence that Fried encouraged her son to conceal donations to Mind the Gap, a political nonprofit that she co-founded.

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