Key points to remember
- Sam Bankman-Fried would pay his legal fees with $11.7 million he gave to his father.
- He made the gift in 2021 using his lifetime estate and gift tax exemption.
- The money originally came from a loan from Alameda.
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Sam Bankman-Fried claimed to only have $100,000 to his name the day after FTX collapsed. So how does he finance his legal defense?
A donation of $11.7 million
As Sam Bankman-Fried’s legal difficulties continue to mount, observers wonder how he was able to afford his lawyer.
According to a new report from Forbesformer FTX CEO Sam Bankman-Fried paid his legal fees with funds originally owned by Alameda Research.
Bankman-Fried reportedly borrowed more than $10 million from Alameda in 2021 and arranged to give the money to his father, Joseph Bankman, using his lifetime estate and gift tax exemption. According to Forbes, the tax-free gift, estimated at $11.7 million, was used to pay for Bankman-Fried’s defense. “I will spend almost all of my resources on Sam’s defense,” Bankman previously said. Bankman-Fried’s parents have already leveraged their multimillion-dollar Palo Alto property to help secure the disgraced crypto founder’s $250 million bail package.
Bankman-Fried retained Mark Cohen and Christian Everdell of Cohen & Gresser, who previously represented Ghislaine Maxwell in her sex trafficking trial. His legal bills are expected to reach several million dollars.
The FTX co-founder previously tried to take control of his 56 million Robinhood shares (currently worth around $507 million) and use them to pay his bills. However, the Justice Department seized the shares as they were suspected to have been purchased with funds from FTX clients. It is likely that Bankman-Fried’s lifetime gift to his father was also made using the client’s assets.
Bankman-Fried further requested to use its FTX insurance policy to cover its legal costs. The new management of FTX refused his request.
Disclaimer: At the time of writing this article, the author of this article owned BTC, ETH, and several other crypto assets.