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Former FTX Compliance Officer Faces Insider Payoff Lawsuit

Daniel Friedberg and Sam Bankman-Fried
Daniel Friedberg (left); Sam Bankman-Fried (right)

NEW YORK – Lawyers representing FTX have initiated legal proceedings against Daniel Friedberg, the defunct company's former compliance officer. The lawsuit alleges that Friedberg made secret payments to insiders who had knowledge of the exchange's executives' purported criminal activities. The complaint, filed on Tuesday, outlines multiple charges including legal malpractice, breach of fiduciary duty, corporate waste, and fraudulent transfers.

In the complaint, FTX's legal team accuses Daniel Friedberg of serving as a "fixer" by allegedly providing significant sums of money as "hush money" to potential whistleblowers. These individuals threatened to expose alleged misappropriation of user funds by FTX executives. According to the lawsuit, Friedberg faces a total of 11 charges for his involvement in these activities, which aimed to protect the interests of FTX insiders.

FTX's legal team emphasized that Friedberg had a responsibility to prioritize the interests of Alameda and FTX above his own and those of other insiders. However, they claim that he breached this duty by facilitating the unauthorized withdrawal of billions of dollars from these entities. These funds allegedly benefited Friedberg, Bankman-Fried, and other FTX insiders.

From 2017 until the collapse of FTX and Alameda Research in November 2022, Friedberg held the positions of chief compliance officer for FTX's U.S. division and general counsel for Alameda Research. The precise amount of money paid by FTX executives to maintain the silence of insiders is redacted in the complaint.

FTX's legal representatives are seeking the recovery of these undisclosed payments, in addition to demanding interest on Friedberg's $300,000 annual salary, which was paid by both FTX.US and Alameda. They are also requesting the return of Friedberg's $1.4 million signing bonus and the equity stake he held in FTX.US. Furthermore, FTX lawyers have called for the restoration of 102 million Serum tokens, valued at over $12 million, that were granted to Friedberg during his tenure.


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