Former FTX “chief regulatory officer” Dan Friedberg allegedly helped steal billions of dollars from customer funds on the cryptocurrency platform while serving as a private “fixer” for disgraced founder Sam Bankman-Fried, in line with the bombing lawsuit.
In a lawsuit filed on Tuesday in a Delaware bankruptcy court, FTX’s current custodians alleged that Friedberg – a lawyer linked to the infamous UltimateBet online poker fraud scandal – assisted Bankman-Fried in a “wholesale customer deposit raid”.
Friedberg was allegedly involved in “whitewashing whistleblower complaints” concerning the misuse of those funds – at one point he paid “exorbitant silence money” to an unnamed former FTX worker who raised the alarm, the lawsuit claims.
“In relation to multiple whistleblower complaints alleging corporate malpractice, Friedberg served as a Bankman-Fried fixer,” the grievance reads. “Not only has it settled claims for overcharges, but in some cases it has arranged for FTX Group to retain whistleblower lawyers after settlements, thereby buying or otherwise ensuring their silence.”
Friedberg held top compliance positions at FTX while also serving as general counsel at Alameda Research, a doomed cryptocurrency hedge fund run by Bankman-Fried’s ex-girlfriend Caroline Ellison.
Bankman-Fried is alleged to have stolen billions of FTX client funds to support Alameda risk bets, buy luxury real estate and make substantial political donations. He pleaded not guilty and can appear in federal court in Manhattan this fall on various charges.
In a bankruptcy court filing, FTX officials claimed that Friedberg “personally received hundreds of thousands of dollars in unjustified bonuses and other damages” while at the corporate.
Friedberg was allegedly “rewarded for his 22-month service at Alameda and the U.S. FTX exchange” with a windfall that included “tens of hundreds of thousands of dollars price of cryptocurrency, in addition to handsome money compensation and a bonus of greater than $3 million.”
FTX tries to get the a reimbursement.
“The plaintiffs seek recovery of damages brought on by Friedberg’s breach of fiduciary duties, malpractice and other wrongdoing, and recovery of all amounts fraudulently transferred to Friedberg, including any cryptocurrency, bonuses and the rest of value,” the lawsuit said.
The lawsuit alleged that Joe Bankman, Bankman-Fried’s father and Stanford law professor, personally vouched for Friedberg and urged his son to offer him a “star role” in FTX.
Bankman told his son to “keep Friedberg up thus far … in order that we’ve got one person on the helm of every little thing,” in line with the lawsuit.
Friedberg’s attorney and Bankman-Fried’s representative didn’t immediately reply to requests for comment on the lawsuit.
In a filing earlier this week, FTX representatives mentioned a “senior FTX Group lawyer” who “actively facilitated and concealed FTX Group’s mixing of client and company funds.”
This filing didn’t mention Friedberg by name, however the Wall Street Journal reported that he was the attorney in query.
A previous filing detailed one episode where an anonymous “attorney-1” gave a “bonus” of $1 million to a former official of the Bahamas government to “obtain the obligatory business license for FTX DM inside ten weeks.”
Friedberg has come under intense scrutiny since FTX’s stunning bankruptcy last November.
As The Post reported on the time, Friedberg was previously a lawyer at UltimateBet, a once-popular online poker platform that collapsed in 2000 after it was revealed that some insiders had access to an exploit called “God Mode” that allowed them to see players’ hidden cards.
The scheme ensnared outstanding victims, including actor Ben Affleck, and extorted tens of hundreds of thousands of dollars from players before UltimateBet was finally shut down.
In leaked audio material published in 2013 and still widely available online, Friedberg taught UltimateBet management the way to downplay the situation and minimize compensation payments to victims. Friedberg later told NBC News that the meeting was illegally recorded, but didn’t dispute its authenticity.
Friedberg has never been charged with against the law for his work at UltimateBet and there isn’t any indication that he has ever been investigated by authorities or regulators.
No criminal charges have been filed against Friedberg for his work at FTX. In January, Reuters reported that it approached Bankman-Fried and cooperated with the feds as they investigated the corporate’s collapse.
Days after FTX’s bankruptcy last November, Friedberg reportedly told FBI agents in an email that he desired to “cooperate in every way.”
Ellison and at the least two other former FTX executives, Nishad Singh and Gary Wang, are also cooperating with authorities.