Lawyers for Sam Bankman-Fried’s father step up as FTX investigation intensifies

The father of disgraced FTX CEO Sam Bankman-Fried has advocated as officials investigate his ties to the cryptocurrency company.

Joseph Bankman, a Stanford University law professor, has reportedly hired Sean Hecker of Kaplan Hecker and Fink LLP to represent him, Reuters reported.

Hecker, on the firm’s website, describes himself as “an experienced trial attorney whose practice focuses on white-collar criminal defense, government and internal investigations, complex civil litigation, and regulatory compliance.”

Bankman has not been charged with any wrongdoing, but current FTX CEO John Ray recently confirmed that the company was looking into “legal advice” the father may have given his son, as well as the cash payments.

Ray told lawmakers while speaking on Capitol Hill last month that his team was “investigating” the role Bankman and his wife, Stanford law professor Barbara Fried, played in the company’s downfall.

Reports have since surfaced that Bankman used his connections within his field to provide his son with “legal advice” on how to run FTX.

Last month, Ray said the company was looking into the scope of his role.

“I don’t know if he really had ’employee’ status, but he certainly got paid, the family got paid,” Ray said in December.

Bankman, a tax law expert, also regularly attended Capitol Hill meetings with his son as the company gained notoriety.

The Stanford father and professor are said to have played an important role in the company’s philanthropic activities.

Company officials have stated that Fried was not on the company’s payroll. However, her son was known to have contributed to the Democratic organizations she oversaw.

DailyMail.com has contacted Kaplan Hecker and Fink but was unable to reach officials for comment by press time.

Bankman-Fried has been accused of orchestrating an $8 billion scheme to defraud investors.

The former cryptocurrency boss, who was arrested and extradited to the US from his base of operations in the Bahamas last month, is under house arrest at his parents’ home in Palo Alto, California, worth $4. millions of dollars.

The parents put up their home as collateral as part of their $250 million bail release.

While awaiting trial, Bankman-Fried published a post on the Substack blog Thursday professing her innocence.

“I did not steal funds, and I certainly did not save billions,” Bankman-Fried wrote.

“Almost all of my assets were and still are usable to support FTX clients.”

The 30-year-old disgraced former crypto king accused Binance chief Changpeng ‘CZ’ Zhao of waging a lengthy campaign to destroy his empire.

The news that Bankman has filed as a lawyer comes just days after the FTX co-founder told police that Bankman-Fried ordered him to create a “secret” backdoor to funnel money to Alameda Research.

FTX attorney Andrew Dietderich told the Delaware bankruptcy court Wednesday that Gary Wang was told to create the secret line of credit from FTX client funds to the hedge fund.

Dietderich told the court that Wang “created this backdoor by inserting a single number into millions of lines of code for the exchange” creating the credit line, to which “customers did not consent.”

FTX’s lawyer testified that the backdoor was a “secret way for Alameda to borrow from clients on the exchange without permission,” Business Insider reported.

“Wang created this backdoor by inserting a single number into millions of lines of code for the exchange, creating a line of credit from FTX to Alameda, to which customers did not consent,” Dietderich testified earlier this week.

And we know the size of that line of credit. It was 65,000 million dollars,’ he said.

Bankman-Fried had moved $10 billion between the two companies, and another $2 billion has yet to be accounted for, sources told Reuters in November.

The lawyer’s testimony corroborates the allegations made by the Commodity Futures Trading Commission, the independent federal agency that “regulates derivatives such as futures and swaps,” according to its website.

Last month, the CFTC filed charges against Wang and Alameda Research CEO Caroline Ellison, who was also Bankman-Fried’s on-and-off girlfriend.

The CFTC accused Wang of creating a “virtually unlimited” secret line of credit. Dietderich’s testimony is believed to be the first time an FTX official has given the credit line a firm dollar value.

Wang and Ellison have pleaded guilty to federal charges including fraud and conspiracy. They have been cooperating with investigators.

It alleged that Zhao’s ‘fateful tweet’ on November 6 capped an ‘extremely effective months-long PR campaign against FTX’.

“In November 2022, an extreme, rapid, and targeted crash precipitated by the Binance CEO rendered Alameda insolvent,” Bankman-Fried wrote.

The disgraced FTX founder’s business collapsed shortly after Zhao tweeted that Binance was abandoning its position in FTX’s in-house digital token FTT.

The tweet started a ripple effect that pushed Bankman-Fried’s crypto hedge fund Alameda Research into insolvency and FTX had to file for bankruptcy on Nov. 11.

Bankman-Fried now faces eight criminal charges, accusing him of defrauding FTX investors whose money he had. He made his first appearance in a Manhattan court last month, when a judge released him on bail with a $250 million bond.

On January 3, he pleaded not guilty to fraud and other criminal charges. A judge has set his trial to begin on October 3.

Continuing to speak publicly in this way is likely to come as a surprise, as he is ignoring the lawyers who advised him that he should ‘back down a hole’. The lawyers said such statements would likely make life more difficult for defense attorneys at their upcoming trial.