Crypto exchange FTX has taken legal action against its former regulatory and compliance executive, Daniel Friedberg, accusing him of making payments to prevent staff from blowing the whistle on exchange issues. FTX alleges Friedberg acted as a “fixer” for co-founder Sam Bankman-Fried, making “hush money” payments to potential whistleblowers.
FTX has filed a lawsuit against Daniel Friedberg, a former executive who held key positions at the exchange, including a chief regulatory officer, chief compliance officer of FTX US, and general counsel at Alameda Research. The complaint asserts that Friedberg played the role of a “fixer” for FTX co-founder Sam Bankman-Fried, making undisclosed payments to silence potential whistleblowers and prevent them from leaking information about regulatory concerns and the alleged close connections between FTX and Alameda Research.
In its 40-page filing, FTX brings forward 11 civil charges against Friedberg. The allegations include breaching legal duties, approving fraudulent transfers, and facilitating questionable “loans” to other former FTX executives. The complaint seeks to recover compensation provided to Friedberg during his 22-month tenure at the exchange, including a $300,000 salary, a $1.4 million signing bonus, and an 8% equity stake in FTX US.
Certain details in the complaint, particularly regarding the amounts paid to the whistleblowers, have been redacted, underscoring the matter’s sensitivity.
The lawsuit highlights the significance of maintaining regulatory compliance and transparency in cryptocurrency. FTX’s actions demonstrate their commitment to addressing potential wrongdoing and upholding the integrity of their operations. FTX aims to hold individuals accountable for their actions by pursuing legal recourse and reinforcing a culture of ethical conduct.
As the case unfolds, how the legal proceedings will impact FTX and its reputation within the crypto community remains to be seen. Transparency, regulatory compliance, and maintaining a robust whistleblowing mechanism are crucial for fostering trust and ensuring the long-term success of cryptocurrency exchanges.
FTX’s lawsuit against former executive Daniel Friedberg sheds light on the alleged payment of hush money and the importance of maintaining transparency and regulatory compliance within the crypto industry.