Case Against Former FTX Compliance Chief Seeks To Clawback Compensation

New management at bankrupt crypto exchange FTX has filed a lawsuit against former Chief Compliance Officer (CCO) Daniel Friedberg, alleging he enabled fraud and paid "hush money" to prevent employees and their attorneys from exposing those fraudulent activities.1

Key Takeaways

• FTX has filed a lawsuit against former CCO Daniel Friedberg regarding his role in the fraudulent activities happening behind the scenes at the crypto exchange.
• As part of the complaint, Friedberg is accused of providing hush money to two unnamed whistleblowers, referred to in the complaint as Whistleblower-1 and Whistleblower-2, with one receiving an "extraordinary settlement."
• Additionally, FTX cut a $12 million deal with Whistleblower-1's attorneys in an effort to secure their silence as well.
• The lawsuit seeks to return the compensation the company provided to Friedberg during his time at FTX.

Just a couple of days after a scathing report by FTX's new CEO John J. Ray III claimed FTX intentionally misused and misappropriated customer funds prior to its November 2022 collapse, this new lawsuit could shed more light on the role that some prominent executives played.

FTX's Lawsuit Against Its Former CCO

FTX's filing includes multiple civil charges against Friedberg, accusing him of breaching his legal duties, approving fraudulent transfers, and granting loans to other former FTX executives. During his tenure at FTX, Friedberg...

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