Joseph Bankman and Barbara Fried, the parents of former FTX CEO Sam Bankman-Fried, have been in the Bahamas with their son for more than one month.
FTX recently filed for bankruptcy after users discovered that the company was likely fraudulently intertwined with sister trading firm Alameda Research; both were controlled by Bankman-Fried and a close-knit group of amateur executives working from a luxury penthouse in the island nation. Bankman and Fried, who work as professors at Stanford Law School, have reportedly placed their lives on hold to stay in the Bahamas with their 30-year-old son and provide some measure of legal support, according to a report from The Wall Street Journal.
“They want him to protect himself, and he won’t,” family friend and former Stanford Law dean Larry Kramer told the outlet. “They’ve decided, ‘We’re not going to fight with our son.’”
Bankman has postponed his law class that was previously scheduled to begin in January, according to a spokeswoman for the couple who would not comment on whether they are providing their son with legal advice. Fried, who retired from her academic post in September, has resigned as chairwoman of Mind the Gap, a political action committee that fundraises for the Democratic Party among wealthy executives in California’s Silicon Valley.
The cryptocurrency exchange reportedly purchased a home in the Bahamas where Bankman and Fried often stayed while they visited their son. The couple, however, is reportedly lodged elsewhere as their son faces a criminal investigation from the Securities and Exchange Commission and a probe from the Justice Department. They have reportedly told friends that their son’s legal fees could drain their savings.
Bankman, who has drafted legislation for Sen. Elizabeth Warren (D-MA), one of the most ardent skeptics of cryptocurrency in the federal government, served for nearly one year as a paid employee at FTX, primarily overseeing the company’s charitable activities. One such project was enabling poor Americans to start cryptocurrency wallets. Fried, however, was never formally involved in the company.
Bankman-Fried contributed nearly $39 million to Democratic candidates during the recent midterm cycle, according to data from Open Secrets, which listed him as the nation’s sixth-largest individual midterm donor. He claimed to have contributed “about the same amount” to Republicans through dark money channels in a recent interview. The self-professed “effective altruist” also donated millions of dollars to various media outlets and provided loans to the chief executive of cryptocurrency publication The Block.
David Mills, another professor at Stanford Law, reportedly received a call from Bankman once his son shared that the cryptocurrency empire was in dire straits. Mills reportedly said that “Sam needs lawyers, and desperately,” before agreeing to serve as a legal adviser for the embattled young entrepreneur. He has accepted several media interviews despite his legal counsel’s advice.
Bankman-Fried currently plans to appear before the House Financial Services Committee on Tuesday. The now-broke former billionaire was initially hesitant to appear before lawmakers, claiming that he first needed to finish “learning and reviewing what happened.”
House Financial Services Committee Chairwoman Maxine Waters (D-CA) had been criticized for her extraordinarily polite invitation to Bankman-Fried; she told the would-be cryptocurrency wunderkind, who may have lost untold billions in customers’ funds, that lawmakers “appreciate that you’ve been candid in your discussions about what happened.”