It should be noted that defending the former head of bankrupt cryptocurrency exchange FTX, Sam Bankman-Friede, is not cheap. As it became known at the end of January 2023, the case involves 150 employees at Sullivan & Cromwell. 20 per cent of them are paid more than $2,000 per hour for their services, while the time of the lesser-known employees is estimated to be as much as $1,500.

Naturally, on a scale of days and weeks, such activity would cost millions of dollars. What is particularly noteworthy is that the Sam Bachmann-Friede trial is scheduled for at least October 2023, which means that during this time the lawyers will also be working and earning.

Why “at least for October”? The fact is that in early March 2023 Sam’s lawyers sent a letter to Judge Lewis Kaplan. It hinted that the lawyers might ask for a postponement of the criminal trial in the future. According to the lawyers, they are waiting for a “substantial amount” of evidence to arrive in the case, which means it will take a longer period of time to prepare the defence.

Given what is happening, the question has arisen as to where the resources are coming from to provide Sam’s legal defence. And the answer has tentatively emerged.

Where did the FTX users’ money go?

On the eve, Forbes learned that Bunkman-Fried is paying his legal fees through an “expensive gift” previously made to his father. As CEO of FTX in 2021, Sam made a large cash gift to Stanford law professor Joseph Bankman.

Information about this was shared by insiders familiar with the details of what happened. According to them, the gift was financed with a loan taken from trading firm Alameda Research, also founded by Sam Bankman-Fried.

Recall that the former FTX executive himself is on trial for at least twelve criminal charges, including wire fraud, money laundering and securities fraud. Sam is also accused of bribery and misappropriation of funds from clients of his companies.

Insiders note that the funding of the legal fees is costing Bankman-Fried millions of dollars. The defendant is being represented by lawyers Mark Cohen and Christian Everdell of Cohen & Gresser, as well as criminal defence lawyer David Mills. The total amount of the gift to Sam’s father could be as high as $10 million.

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This money was transferred to Bunkman Sr with a loan from Alameda, and with no tax cost. Here’s an insider’s quote about it.

After receiving at least $10 million, Sam Bunkman-Fried sent the funds to his father using his lifetime estate tax exemption and a gift – essentially a tax-free gift.


Of course, such information raises serious concerns. Still, according to the US Attorney's office, Sam, along with other "tops" of the FTX cryptocurrency exchange, created a so-called backdoor in the platform. The latter allowed users of the trading platform to surreptitiously withdraw funds into the accounts of a nearby trading company, Alameda. Well, the money was then used both for the latter's trading positions and for the personal needs of the companies' management as a whole.

And so there is a possibility that this gift was also made by using other people's money in one way or another. Recall that FTX's new lawyers had earlier demanded that politicians return the donations they received directly from Sam Bankman-Fried and his associates. They made it clear that FTX's creditors needed this money, with lawyers sure to get their hands on the finances. Whether a similar fate awaits Sam's father is unknown.


A psychologist and renowned lawyer, Bankman Senior, who specialises in tax law, declined to comment on the information obtained by journalists. Sam Bankman-Fried and his lawyers have also not seen fit to refute or confirm insider rumours.

We think this news should at the very least cause concern for the current liquidators of crypto exchange FTX and trading company Alameda. After all, their job is to find and recover as much money as possible, which will then be used to reimburse the companies' creditors. Well, here we are talking about a large amount of money that was taken as a loan from another Sam's company, whose accounts were funded by users of the FTX cryptocurrency exchange. The situation may be worth investigating in more detail, as in theory it could lead to more rapid compensation for the victims of the collapse of Sam's empire.

The question of the legality of the transfer to Sam’s father will probably still bring some difficulties in court. Stay tuned for more developments in our crypto-chat of ex-rich people. There we will discuss other important developments from the world of decentralised digital assets.