FTX, a cryptocurrency exchange, has taken legal action against its former head of regulation and compliance, Daniel Friedberg, accusing him of making payments to silence employees who might report issues within the company. The lawsuit, filed on June 27. alleges that Friedberg acted as a "middleman" for FTX's co-founder, Sam Bankman-Fried, who was influenced by his father to grant Friedberg a significant role within the exchange. FTX claims that Friedberg paid "hush money" to potential whistleblowers to prevent them from disclosing regulation tory concerns and a perceived close relationship between FTX and Alameda Research.
According to FTX's complaint, Friedberg allegedly made payments to bribe whistleblowers and hired an attorney specialized in handling whistleblower cases. The lawsuit, spanning 40 pages, lists 11 civil charges against Friedberg, including violating leg al duties and approving fraudulent transfers and loans to former FTX executives . During his 22-month tenure at FTX, Friedberg reportedly received substantial compensation, including a $300.000 salary, a $1.4 million signing bonus, additional cash bonuses totaling $3 million, an 8% stake in FTX US, and cryptocurrency valued in the tens of millions of dollars. FTX seeks to recover all losses resulting from Friedberg's alleged actions.
Details related to whistleblower compensation in the complaint have been redacted, but it mentions an incident in which Friedberg offered an "extraordinary settlement" to a female employee named "Whistleblower-1" who had worked for FTX US for less than two months. TX also asserts that Friedberg initiated a $12 million deal to retain attorneys for Whistleblower-1 following the settlement. The demand letter from Whistleblower-1 claimed that Alameda Research was essentially an extension of FTX, utilized to boost investor confidence in FTX projects and drive up prices. The ex-employee further alleged that fundraising and project details were disclosed on Slack, allowing all employees to trade on this information before public announcements.
In another alleged case, Friedberg purportedly terminated a lawyer known as "Whistleblower-2" who expressed concerns about governance and regulatory issues within Alameda Research. Despite the short duration of their employment (less than three months), the individual received severance pay. FTX claims that an unnamed senior attorney facilitated and concealed the mingling of client funds, with the Wall Street Journal later reporting that this lawyer was Daniel Friedberg. Friedberg is also mentioned as having provided information to investigators from the US Attorney's Office. Fur thermore, his evidence could potentially undermine the defenses put forth by certain defenders in a class-action lawsuit involving celebrities accused of promoting FTX.
