- Sam Bankman-Fried is reportedly paying his legal fees for the $11.7 million he gave his father, Joseph Bankman.
- He made the gift in 2021 using his lifetime estate and was exempt from gift tax.
- The money originally came from an Alameda loan.
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Sam Bankman-Fried claimed to have only $100,000 to his name in the immediate aftermath of the FTX collapse. So how is he bankrolling his legal defense?
An $11.7 Million Gift
As Sam Bankman-Fried’s legal woes continue to mount, observers are wondering how he is able to deliver his legal advice.
According to a new report from Forbesformer FTX CEO Sam Bankman-Fried is paying his legal fees with funds that originally belonged to Alameda Research.
Bankman-Fried reportedly borrowed more than $10 million from Alameda in 2021 and arranged to give the money to her father, Joseph Bankman, using his lifetime estate and free of gift taxes. According to Forbes, the tax-free gift—believed to be worth $11.7 million—was used to pay for Bankman-Fried’s defense. “I’m going to put all my resources into Sam’s defense,” Bankman once said. Bankman-Fried’s parents have already leveraged their multi-million dollar Palo Alto property to help secure the embattled crypto founder’s $250 million bail package.
Bankman-Fried has retained the services of Mark Cohen and Christian Everdell of Cohen & Gresser, who previously represented Ghislaine Maxwell during her sex trafficking trial. His legal fees are likely to run into several million dollars.
The FTX co-founder previously tried to take control of his 56 million Robinhood shares (now worth approximately $507 million) and use them to pay his bills. However, the Department of Justice seized the shares because it was suspected that they were bought with the funds of FTX’s customers. It is likely that Bankman-Fried’s lifetime gift to her father was also made using the client’s assets.
Bankman-Fried even asked to use her FTX insurance policy to cover her legal fees. The new management of FTX refused his request.
Disclaimer: At the time of writing, the author of this piece owns BTC, ETH, and other crypto assets.