Market News

FTX Accuses Former Executive of Using ‘Hush Money’ to Silence Whistleblowers

FTX Accuses Former Exec of Utilizing 'Hush Money' to Silence Whistleblowers

Cryptocurrency exchange FTX has taken legal action against its former regulatory and compliance executive, Daniel Friedberg, alleging that he orchestrated a series of payments to prevent employees from exposing the exchange’s issues.

In a 40-page lawsuit filed on June 27, FTX accuses Friedberg of making “hush money” payments to potential whistleblowers, along with other fraudulent activities.

The exchange seeks to recover substantial sums of money and equity granted to Friedberg during his tenure.

These allegations have sent shockwaves through the crypto industry, shedding light on the alleged close ties between FTX and Alameda Research.

Key Points:

  • FTX files a lawsuit against former executive Daniel Friedberg, accusing him of using payments to silence potential whistleblowers.
  • Friedberg allegedly made “hush money” payments to prevent leaks about regulatory issues and the close relationship between FTX and Alameda.
  • FTX asserts that Friedberg breached legal duties, approved fraudulent transfers, and facilitated questionable loans to former FTX executives.
  • The exchange aims to reclaim substantial compensation and equity awarded to Friedberg during his 22-month employment.
  • Redacted portions of the complaint involve the amounts paid to the whistleblowers, adding intrigue to the case.
  • FTX highlights an extraordinary settlement made to a former employee who claimed that Alameda was an extension of FTX, manipulating prices.
  • Friedberg allegedly retained the law firm representing the whistleblower after the settlement, despite no genuine need for their services.
  • Another instance involved the firing of an attorney who raised concerns about governance and regulatory issues at Alameda.
  • The Wall Street Journal reported Friedberg’s involvement in facilitating and covering up the comingling of customer funds.
  • Friedberg’s cooperation with investigators and provision of evidence in a class action lawsuit against FTX-promoting celebrities is also mentioned.
Tags

James Wilson is a crypto writer and researcher with over 5 years of experience in the industry. He is a graduate of the University of California, Berkeley, where he studied computer science and economics. After graduating, he worked as a software engineer at a major tech company before transitioning to a career in crypto.