FTX sues ex-compliance officer for facilitating management fraud at exchange.

FTX has filed a complaint in court that claims that Daniel Friedberg, one of its former top attorneys, was a major part of the fraud that company founder Sam Bankman-Fried and other top executives perpetrated. The complaint , which was filed in the US Bankruptcy Court in Delaware on Tuesday, claims that Friedberg acted as the company’s fixer on several occasions. That is, he was responsible for silencing, albeit with hush money payments, anyone that dared raise concerns about the company’s impropriety.

While Friedberg served as FTX US’s chief compliance officer, he was also a general counsel to Alameda Research, the trading arm of the exchange. His job roles ensured that Friedberg effectively helped FTX’s former management’s fraudulent scheme, per the complaint.

Rather than escalate concerns, Friedberg was said to deliberately ignore the alleged lack of internal controls at the exchange. And would even go as far as ‘whitewashing’ employee complaints by settling claims for “inflated” amounts. The money was being thrown around so much that even in some cases, Friedberg would hire law firms that represented whistleblowers to act on behalf of FTX, says the company.

According to the lawsuit, Friedberg ultimately created an enabling environment for FTX executives to mismanage customer funds. And he didn’t do all that for nothing. The lawsuit also claims that Friedberg received millions of dollars in unjustified compensation.

He currently faces 11 charges from FTX’s new legal team. And the charges include breach of fiduciary duty, legal malpractice, corporate waste, and several others related to fraudulent transfers. However, the full extent of Friedberg’s involvement and the damages thereof will only be determined at trial.

FTX Seeks to Claw Back Tens of Millions of Dollars

Meanwhile, FTX is also seeking to reclaim the funds Friedberg received while working for FTX. Those include payments linked to his $300,000 salary at FTX US, a $1.4 million signing bonus, an equity stake in the US arm of the exchange, and another $3 million payment from Alameda. Together, all of the funds are estimated to be worth “tens of millions” of dollars.

FTX filed for bankruptcy in November 2022 after mismanaging customer deposits. And the company’s new leadership has repeatedly claimed that the firm’s failure was caused by Bankman-Fried and other top executives.

Bankman-Fried has been criminally charged for using billions in FTX customer funds to fund his personal ambitions. Although he pleads not guilty, at least three other FTX executives have pleaded guilty to US charges.

We will continue to update Phone&Auto; if you have any questions or suggestions, please contact us!


Was this article helpful?

93 out of 132 found this helpful

Discover more


Voyager sells 1.4T SHIB, good news for SHIB.

Voyager Digital has been strategically managing its crypto assets by transferring them to Coinbase, including the pop...


Self-sovereign identity empowers users to own their data.

According to Arno Bauer from BNB Chain, self-sovereign identity empowers Web3 projects to adhere to specific regulati...


Shibarium Hype: Shiba Inu Whales Grab 1 Trillion SHIB Tokens

Shiba Inu, a highly popular alternative cryptocurrency in the market, has experienced a remarkable surge in its price...


SHIB price analysis: Bearish pattern weighs on SHIB advance.

The recent performance of Shiba Inu (SHIB) has seen a temporary decline in its price. This phase of correction, accom...


Shiba Inu’s Burning Surge: Blazing a Path to Growth and Stability

The Shiba Inu meme coin community is currently thriving with a contagious sense of enthusiasm, thanks to two signific...


Shiba Inu: Will It Make a Comeback as Meme Coins Rebound?

The Shiba Inu price has experienced a slight decrease of 4.5% this morning, currently sitting at $0.000009051. This d...