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Parents of the founder of bankrupt crypto exchange FTX face their own legal troubles

A MARTÍNEZ, HOST:

It is said to be one of the largest alleged financial frauds in history.

SARAH MCCAMMON, HOST:

And the man accused of orchestrating all of it, Sam Bankman-Fried, the founder of the bankrupt crypto exchange FTX, is set to go on trial next week. If he's found guilty, SBF, as he's better known, could spend the rest of his life in prison. Throughout pretrial proceedings, two people have been at his side constantly - his parents. And they're both star professors at Stanford Law School, but now they're facing their own legal trouble.

MARTÍNEZ: NPR's David Gura joins us now. David, so who are SBF's parents?

DAVID GURA, BYLINE: Well, A, they're both very prominent academics. And from what I've been told, they're very beloved members of the Stanford Law School community, a very close-knit community. And a theme in their scholarship is social welfare, social fairness. I'll start with Joe Bankman. He's an expert on tax law. He's written a lot of books. He's invested a lot of time and his own money in an effort to make it easier for people to file their taxes. And a few years ago, he decided to get his doctorate in psychology. Bankman now works part time as a therapist in the Bay Area.

Barbara Fried has retired from teaching at Stanford. She's an expert on legal ethics. She was a student at Harvard when some giants of modern philosophy were teaching there - Robert Nozick, John Rawls. And in recent years, Fried has tried her hand at fiction and poetry. She turned her attention to politics. She co-founded a political nonprofit that shied away from the spotlight with the goal of electing more Democrats to the House of Representatives. But for almost a year now, honestly, Bankman and Fried have been wholly focused on their son's defense. By all accounts, A, this is a very close-knit family.

MARTÍNEZ: And how are they involved with what their son is being accused of? What are they being accused of, actually?

GURA: Yeah. They're facing a major civil suit. They're accused of being integrally involved in SBF crypto empire, which collapsed last year. Joe Bankman allegedly offered legal advice. He helped with hiring decisions. Bankman talked about how he got involved in a podcast interview FTX produced last year.

(SOUNDBITE OF ARCHIVED RECORDING)

JOE BANKMAN: It was clear at the start that on things like law - I mean, the company didn't have any lawyers. So I think my utility there was pretty obvious.

GURA: You had a company that was run by a lot of young people. This older, eminent law professor stood out. He had a lot of authority. Now FTX is trying to claw back millions of dollars from Bankman and Fried, millions of dollars in both cash and gifts, including a $16.4 million villa in the Bahamas where FTX was based. Joe Bankman had a paid job at FTX. Barbara Fried did not, but she's accused of advising her son and her son's company on their political giving. SBF gave that political nonprofit she founded tens of thousands of dollars.

MARTÍNEZ: David, what's been the reaction to all this?

GURA: Well, astonishment, according to Michael Klausner, who went to Yale Law with Joe Bankman. Now he's his colleague at Stanford. Bankman is not teaching this quarter, but Klausner says he sees him regularly on campus. I reached out to every professor on the Stanford Law School faculty. Fewer than a dozen replied to me, and only two professors agreed to comment on the record. Mike Klausner is one of them.

MICHAEL KLAUSNER: I think many of us disagree with the way the case has been handled from the moment of the prosecution on.

GURA: Again, Klausner said he was astonished and sad about how this has played out, from how fast the case has gone to trial to decisions the judge overseeing it has made.

MARTÍNEZ: NPR's David Gura. David, thanks for explaining this.

GURA: Thank you. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

A Martínez
A Martínez is one of the hosts of Morning Edition and Up First. He came to NPR in 2021 and is based out of NPR West.
David Gura
Based in New York, David Gura is a correspondent on NPR's business desk. His stories are broadcast on NPR's newsmagazines, All Things Considered, Morning Edition and Weekend Edition, and he regularly guest hosts 1A, a co-production of NPR and WAMU.