FTX Alleges Former Lawyer of Aiding Sam Bankman-Fried's Fraud, Silencing Whistleblowers

FTX's lawsuit accuses Daniel Friedberg, the company's former chief compliance officer, of legal malpractice and breaching his fiduciary duty.

FTX Alleges Former Lawyer of Aiding Sam Bankman-Fried's Fraud, Silencing Whistleblowers

Photo Credit: Reuters

Bankman-Fried has been criminally charged with stealing billions in FTX customer funds

Highlights
  • The complaint was filed on Tuesday in US Bankruptcy Court in Delaware
  • FTX filed for bankruptcy in November after a run on customer deposits
  • Bankman-Fried has pleaded not guilty and denied stealing funds
Advertisement

Bankrupt cryptocurrency exchange FTX sued one of its former top lawyers, accusing him of aiding fraud by company founder Sam Bankman-Fried and silencing whistleblowers who reported wrongdoing at the company.

The complaint, filed on Tuesday in US Bankruptcy Court in Delaware, describes Daniel Friedberg, a former chief compliance officer at FTX and general counsel of its related crypto hedge fund Alameda Research, as a "fixer" for Bankman-Fried and other FTX executives who enabled the "wholesale raiding" of customer funds.

Friedberg “whitewashed” complaints from employees raising concerns about the activities of FTX and Alameda by settling claims for “inflated” amounts and in some cases hiring law firms that represented whistleblowers to perform legal work for FTX, the company said.

The settlement amounts are redacted in the complaint.

A lawyer for Friedberg and a spokesperson for FTX did not immediately respond to requests for comment.

The lawsuit accuses Friedberg of legal malpractice and breaching his fiduciary duty. It seeks to claw back “tens of millions” worth of cryptocurrency Friedberg received while working for FTX, along with his compensation and $3 million (roughly Rs. 24 crore) in bonuses.

FTX filed for bankruptcy in November 2022 after a run on customer deposits. The company's new leadership has accused Bankman-Fried and his associates of widespread failures to implement corporate controls.

Bankman-Fried has been criminally charged in federal court in Manhattan with stealing billions in FTX customer funds to plug holes at the Alameda hedge fund and fund speculative investments. Bankman-Fried has pleaded not guilty and denied stealing funds.

At least three other FTX executives have pleaded guilty to US charges.

Friedberg has cooperated with US investigations into the FTX collapse, Reuters has reported.

Friedberg served as an adviser to Bankman-Fried and his companies while working at law firm Fenwick & West. He became an in-house attorney at both FTX and Alameda in 2020.

© Thomson Reuters 2023


Will crypto tax hurt the industry in India? We discuss this on Orbital, the Gadgets 360 podcast. Orbital is available on Spotify, Gaana, JioSaavn, Google Podcasts, Apple Podcasts, Amazon Music and wherever you get your podcasts.
Affiliate links may be automatically generated - see our ethics statement for details.
Comments

For details of the latest launches and news from Samsung, Xiaomi, Realme, OnePlus, Oppo and other companies at the Mobile World Congress in Barcelona, visit our MWC 2024 hub.

Oppo Enco Air 3 Pro India Launch Date Confirmed via Amazon Listing: All Details
Share on Facebook Gadgets360 Twitter Share Tweet Snapchat Share Reddit Comment google-newsGoogle News

Advertisement

Follow Us

Advertisement

© Copyright Red Pixels Ventures Limited 2024. All rights reserved.
Trending Products »
Latest Tech News »