Crypto exchange FTX, founded by Sam Bankman-Fried, is suing former executive Daniel Friedberg for allegedly paying off whistleblowers.
Friedberg served as FTX’s chief regulatory officer, as the chief compliance officer for FTX US, and was part of Alameda Research’s general counsel.
The new CEO of FTX, John Ray III, took over to guide it through the bankruptcy process. Under Ray’s leadership, FTX now alleges that Friedberg often “fixed” problems for Bankman-Fried — such as silencing at least two whistleblowers with hush money before they could broadcast FTX’s problems.
Those problems included regulatory issues and closer ties between FTX and Alameda Research than Bankman-Fried wanted to admit.
The lawsuit includes eleven civil counts, including breach of fiduciary duty and approval of fraudulent transfers and “loans” to FTX executives.
FTX is asking to receive Friedberg’s compensation during his time at the firm, including digital assets worth tens of millions of dollars, his ownership stake in FTX US, and $4.7 million in bonuses and salary. Friedberg reportedly received an 8% stake in FTX US but may have held less than that when FTX filed for bankruptcy in November 2022.
As one example among the counts in the suit, Bankman-Fried’s father, Joe Bankman, reportedly urged him to give Friedberg a significant role in the company. The complaint alleges that Bankman reasoned Friedberg could stay “in the loop” and remain “on top of...
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