Attorney John Deaton, a managing partner of The Deaton Law Firm and founder of Crypto Law, asked lawmakers why the parents of Sam Bankman-Fried, the young crypto mogul who founded and ran the cryptocurrency exchange FTX, haven't been arrested. Deaton said on the X platform that Bankman-Fried's parents' political connections and donations could explain why they have yet to face legal scrutiny for any role they might have played in their son's massive fraud scheme.
In that post on X, Deaton tagged what he called "anti-crypto politicians" Sen. Elizabeth Warren (D-MA), SEC Chair Gary Gensler, Rep. Brad Sherman (D-CA), Sen. Sherrod Brown (D-OH), Sen. Jack Reed (D-RI), and Rep. Maxine Waters (D-CA), asking them, "Why haven’t any of you called for both [Bankman-Fried's] parents to be indicted? Is it because his dad advised you, Senator Warren? Is it because his mother is a huge Democrat donor who runs a PAC?"
Deaton said that while some politicians claim to be concerned about fraud in the crypto ecosystem, none of them has spurred an investigation into Bankman-Fried's parents. "You talk about how crypto is nothing but fraudsters, yet you are silent when it comes to your friends and donors," Deaton said in the post. "You all should be ashamed of yourselves. You have no honor, no integrity."
Bankman-Fried is facing multiple criminal fraud charges for allegedly commingling funds between FTX and its associated hedge fund, Alameda Research, according to Investopedia. After a high-profile bankruptcy filing in November, it came to light that about a billion dollars of investor and customer funds were missing. Bankman-Fried was extradited from the Bahamas to the U.S. in December and subsequently indicted for his role in what some are calling the biggest financial fraud in American history.
Bankman-Fried's parents paid his record $250 million bond in December, after which Bankman-Fried was residing at their $4 million Palo Alto home, where he enjoyed daily jogs, in-home visits from journalists, and a $10,000 per day security detail, CoinTelegraph reported.
Earlier this month, Judge Lewis Kaplan revoked Bankman-Fried's bail, saying he found "probable cause to believe" the former crypto mogul "tried to tamper with witnesses at least twice," Federal Newswire previously reported. Kaplan said in court on Aug. 11 that he believed Bankman-Fried had committed the federal crime of attempted witness tampering by sending an encrypted communication to FTX's general counsel in January, and more recently by sharing his former girlfriend's journal with a reporter. The judge said Bankman-Fried overstepped the boundaries of his $250 million bail package to the point that he threatens the safety of witnesses and must be sent to jail until his October trial.
One of the charges Bankman-Fried originally faced was a campaign finance violation for the more than $40 million he made in political donations during the 2022 election cycle, CBS reported. Citizens for Responsibility and Ethics said in an FEC complaint that Bankman-Fried's donations enabled him "to influence federal elections while evading federal laws that require disclosure of the true source of the contributions."
Prosecutors decided not to pursue the campaign finance violation charge against Bankman-Fried, prompting a Bitcoin.com analyst to raise concerns about "double standards" in enforcement in the crypto industry, Federal Newswire previously reported. Ben Friedman wrote in an opinion piece on Bitcoin.com that although Bankman-Fried allegedly illegally directed more than $100 million from the hedge fund Alameda Research to hundreds of recipients, he seemed to be receiving “cushy treatment."
"It’s hard not to notice the different enforcement priorities when it comes to cryptocurrency exchanges," Friedman wrote. "While exchanges like Binance and Coinbase faced regulatory action, FTX seems to have dodged similar consequences despite the serious allegations against its founder. This inconsistency makes us wonder if all crypto exchanges are held to the same standards."
Before FTX's bankruptcy, a $16.4 million vacation home in the Bahamas was purchased for Bankman-Fried's parents by FTX, with his parents listed as signatories, the Daily Mail reported. A spokesperson for Joseph Bankman and Barbara Fried, both Stanford University law professors, said on the subject of the vacation home, "Since before the bankruptcy proceedings, Mr. Bankman and Ms. Fried have been seeking to return the deed to the company and are awaiting further instructions."
