Sam Bankman-Fried, the founder of the fallen cryptocurrency exchange FTX, is preparing to face trial in October, backed by a team of powerful attorneys. However, it has remained unclear how the former billionaire would afford his pricey defense.
Forbes has learned that Bankman-Fried paid his legal fees from a multi-million dollar gift he gave his father, Joseph Bankman, who is a Stanford Law professor. The gift, which occurred in 2021 while Bankman-Fried was still the CEO of FTX, was reportedly funded by a loan from the exchange’s trading firm, Alameda Research.
The gift and loan are reported to have occurred in 2021, with Bankman-Fried giving his father a large monetary gift that was funded by a loan from Alameda Research. The loan allowed Bankman-Fried to contribute the maximum amount someone is allowed to give in their lifetime, which would have been $11.7 million that year, according to sources with operational knowledge of both companies who spoke to Forbes.
Bankman-Fried, who is facing 12 criminal charges including wire fraud, money laundering, securities fraud, and an additional bribery charge, has pleaded not guilty to all allegations. He is accused of misappropriating FTX customer funds through Alameda, dating back to the exchange’s founding in 2019.
Despite Bankman-Fried’s defense costs reportedly being in the single-digit-millions range, it has been alleged that he improperly received $2.2 billion in company loans and that $8.9 billion in customer deposits are still missing.
Bankman-Fried is currently represented by Mark Cohen and Christian Everdell of Cohen & Gresser, both former federal prosecutors who were part of a defense team that advised Jeffrey Epstein associate Ghislaine Maxwell. He is also being advised pro bono by criminal defense attorney David W. Mills, a close family friend and colleague of Bankman’s at Stanford.
The bankruptcy proceedings and growing scrutiny surrounding the case have reportedly caused Bankman-Fried’s estimated $26.5 billion net worth to plummet, as much of his wealth was tied up in FTX and its FTT tokens.
FTX is now led by new CEO John J. Ray III, a veteran corporate restructuring expert who reportedly charged the company $690,000 in fees for two months of work. Hundreds of lawyers and advisors working on the bankruptcy proceedings have reportedly billed FTX a combined $38 million in expenses.