Bankrupt crypto exchange FTX is suing founder Sam Bankman-Fried's parents, accusing them of siphoning millions of dollars in company funds to enrich themselves and their "pet causes."

The lawsuit aims to recover funds that FTX leaders say were "fraudulently transferred and misappropriated" by Bankman-Fried's parents.

Joe Bankman and Barbara Fried, both tenured Stanford law professors, either knew "or ignored bright red flags" that indicated their son and his business partners were "orchestrating a vast fraudulent scheme," according to the lawsuit.

Attorneys representing Bankman and Fried issued a statement calling the lawsuit's claims "completely false" and "a dangerous attempt to intimidate Joe and Barbara and undermine the jury process just days before their child's trial begins."

FTX collapsed into bankruptcy in November last year as questions about its finances rattled crypto markets and prompted a sudden, massive drawdown of customer funds. It is now at the center of a federal investigation into what prosecutors have called one of the biggest financial frauds in US history.

Bankman-Fried, who is 31 years old, has pleaded not guilty to multiple charges of fraud and conspiracy and is scheduled to go on trial October 3.

The lawsuit against Bankman and Fried, filed late Monday, claims that Bankman and Fried discussed with their son transferring a $10 million cash gift and a $16.4 million luxury property in the Bahamas even as the company was on the verge of insolvency.

FTX is now run by John Ray III, a corporate restructuring expert who testified earlier this year that the FTX case is one of "old-fashioned embezzlement" carried out by unsophisticated businesspeople.

This story is developing and will be updated.