Stanford University has come under scrutiny due to its relation with FTX funds as the exchange debtors filed legal action against Sam Bankman-Fried’s parents on September 19. In response, a spokesperson for Stanford has reportedly acknowledged the donations and committed to returning the funds to the debtors.
Stanford received $5.5 million in donations from the now-bankrupt exchange FTX, purportedly channeled to the university by Joe Bankman, who is not only SBF’s father but also a long-standing faculty member at the university. In reported statement, Stanford spokesperson wrote:
“Stanford received gifts from the FTX Foundation and FTX-related companies largely for pandemic-related prevention and research. We have been in discussions with attorneys for the FTX debtors to recover these gifts and we will be returning the funds in their entirety.”
According to the spokesperson, most of the “gifts” received from FTX or FTX-affiliated entities were designated for “pandemic-related prevention and research.”
Alleged Funds Funneling from FTX to Stanford University
This development follows a lawsuit filed by the FTX estate against its former CEO, SBF’s parents Joe Bankman and Barbara Fried, who are both legal scholars and professors at Stanford University. Notably, they are accused of using their influence to financially “enrich themselves, directly and indirectly, by millions of dollars.”
Joe Bankman, a tax lawyer, held the role of senior advisor at the FTX Foundation, entailing a base salary of $200,000 along with a possible “discretionary bonus,” as outlined in Tuesday’s lawsuit.
The lawsuit contends that Bankman “led the charge” in “fraudulently transferring and misappropriating” $5.5 million in funds directed to Stanford, between November 2021 and May 2022. It also outlines multiple instances where he attempted to funnel funds from FTX and Alameda to Stanford. The debtors alleges:
“Bankman’s repeated efforts to direct funds from the FTX Group to Stanford University constitutes a flagrant breach of those duties, as they effectively enriched Bankman’s employer (Stanford University) at the expense of the FTX Group.”
Representatives for SBF’s parents have called the lawsuit’s allegations “entirely untrue” and “a dangerous attempt to intimidate Joe and Barbara and undermine the jury process just days before their child’s trial begins.”
FTX filed for bankruptcy in November 2022 amid financial concerns, causing a significant loss of customer funds. SBF, awaiting his trial in October, is accused of defrauding investors and mishandling billions in customer funds, which prosecutors have called one of the biggest financial frauds in US history.