FTX Probes Former Executive, Lawsuit Exposes Attempts to Silence Staff

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    In a sudden twist to a complex regulatory narrative, major cryptocurrency exchange FTX has filed a lawsuit against former head of regulation and compliance, Daniel Friedberg.

    FTX Blame Friedberg A series of illicit payments aimed at silencing a whistleblower from exposing the exchange’s regulatory issues and its improper relationship with Alameda Research.

    “Hush Fees” and Allegations of Breach of Duties

    Former FTX Chief Regulatory Officer, FTX.US Chief Compliance Officer and Alameda Research General Counsel Daniel Friedberg allegedly handed out “hush money” to two potential whistleblowers .The controversial act was allegedly meant to prevent information leaks about the exchange. regulatory Problems and compromised connectivity between FTX and Alameda.

    of FTX 40-page lawsuit Friedberg alleges that he hired the whistleblower’s attorney, bought the attorney and the firm, and remained silent. The lawsuit uncovered a wide array of charges against Friedberg. In addition to breaching legal obligations, Friedberg has been charged with illegally transferring money and authorizing dubious “loans” to other former FTX executives.

    Friedberg reportedly received a $300,000 salary, a $1.4 million signing bonus, and a $3 million cash bonus during his 22-month tenure at the exchange. He also received an 8% stake in FTX.US and tens of millions worth of cryptocurrency. The cryptocurrency exchange is now demanding the repayment of this huge reward, adding further pressure to the former executive.

    Former FTX CEO Sam Bankman-Fried faces criminal charges (Source: Shutterstock)

    Whistleblowing and costly settlements

    The FTX lawsuit reveals an alleged case in March 2022 in which Friedberg handed over a “temporary settlement” to a short-term female employee dubbed “Whistleblower 1.” The whistleblower, who received a salary of $200,000 for less than two months at the US-based exchange, won a stunning settlement under Friedberg.

    FTX also alleges Friedberg initiated a $12 million deal to secure Whistleblower 1’s attorneys after the settlement. In his December 2021 letter to FTX, Whistleblower 1 said:

    “Alameda [was] It is merely an extension of FTX and is used to increase investor confidence in FTX projects and drive up the price of projects developed or invested in by FTX. ”

    If true, this activity would be a form of market manipulation. The settlement against Whistleblower 1 and her subsequent detention of her legal team is alleged to be a cover-up for this activity.

    FTX Suddenly Pauses Stock Sales

    Adding to the complexity of the deployment scenario, FTX suddenly Stopped selling one of the assets – Equity in artificial intelligence startup Anthropic. Perella Weinberg Partners, a specialist investment bank that advises FTX, notified bidders of the moratorium earlier this month, according to an anonymous source.

    The story of FTX, Friedberg, and the alleged hush money for whistleblowers is a stark reminder of the need for transparency and good governance in the rapidly evolving cryptocurrency industry. As this case progresses, the true extent of the alleged connections and wrongdoing will likely become more apparent.

    FTX Investigates Ex-Executive, Exposes Attempt To Silence Staff In Lawsuit This article first appeared on MetaNews.


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