FTX, the now-bankrupt crypto exchange once helmed by Sam Bankman-Fried, is taking legal action against its former compliance officer, Daniel Friedberg. Lawyers for the exchange allege Friedberg paid exorbitant hush money to would-be whistleblowers who threatened to expose the exchange’s alleged misappropriation of user funds. The complaint, filed Tuesday, includes 11 charges, such as legal malpractice, breach of fiduciary duty, corporate waste and several counts of fraudulent transfers.
Friedberg had a duty to place the interests of Alameda, FTX…above the interests of himself and the other FTX insiders who were indiscriminately siphoning funds from those entities, FTX lawyers wrote in the complaint. Friedberg breached that duty by enabling the raiding of these entities of billions of dollars for his own benefit and the benefit of Bankman-Fried and the other FTX insiders.
Friedberg served as both the chief compliance officer to FTX’s U.S. arm and general counsel to its sister company Alameda Research from 2017 until the firms’ implosions in Nov. 2020. The amount of money FTX executives paid to keep insiders quiet is redacted in the complaint. FTX’s lawyers are seeking to reclaim payments plus interest on Friedberg’s $300,000 salary paid by both FTX.US and Alameda, in addition to his $1.4 million signing bonus and an equity stake in FTX.US. They have also requested the return of 102 million Serum tokens, worth more than $12 million, that FTX Group granted Friedberg during his tenure.