FTX's case takes another turn as bribing allegations are dropped against a former FTX executive.
FTX, a now-bankrupt cryptocurrency exchange, has filed a lawsuit against Daniel Friedberg, a former FTX's chief regulatory officer.
The lawsuit alleges that Friedberg made multiple payments intended to discourage staff from revealing the crypto exchange's "regulatory issues."
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The lawsuit was filed on June 27th against Friedberg, alleging that the former CRO acted as a "fixer" for the co-founder of the crypto exchange, Sam Bankman-Fried.
The complaint notes that Bankman-Fried's father recommended Friedberg for a crucial role in the company, stating:
Joe Bankman, Bankman-Fried’s father, urged Bankman-Fried and others to give Friedberg a central role and to keep Friedberg "in the loop…so we have one person on top of everything."
On top of that, the lawsuit alleges that Friedberg made "hush money" payments to two staff members to prevent them from revealing information regarding "regulatory issues" and the alleged close relationship between FTX and Alameda.
According to the lawsuit, at one point, Friedberg even paid the lawyer of a whistleblower, “thereby buying or otherwise ensuring their silence.”
The filing, comprising 40 pages, lists 11 civil charges against Friedberg. The charges include allegations of breach of legal duties and approval of fraudulent transfers and "loans" to other former FTX executives.
Over Friedberg's 22-month tenure at the crypto exchange, he allegedly received a $300,000 salary, a signing bonus of $1.4 million, a separate $3 million cash bonus, 8% equity in FTX US, and crypto “worth tens of millions”. FTX is now seeking to reclaim these assets.
The lawsuit also claims that Friedberg gave an “extraordinary settlement” to a female FTX US employee referred to as “Whistleblower-1,” who worked at the US-based exchange for less than two months on a $200,000 salary. Friedberg reportedly followed this up with a $12 million deal to retain the attorney of Whistleblower-1 after the settlement.
The lawsuit comes shortly after FTX's restructuring chief John Ray revealed that an unnamed senior attorney “facilitated and covered up” the misuse of customer funds. In the same announcement, Ray highlighted that FTX managed to recover around $7 billion of misappropriated funds.
This unfolding story highlights the need for transparency and good governance in the increasingly complex world of cryptocurrencies. The cryptocurrency community and investors will be watching this case closely for future developments.
