Lawyers for FTX, the now-bankrupt crypto exchange once helmed by Sam Bankman-Fried, are suing the company’s former compliance officer for allegedly paying off insiders who were witnesses to its executives’ alleged criminal activities.
The complaint, filed Tuesday, alleges Daniel Friedberg served as a “fixer,” paying “exorbitant hush money” to would-be whistleblowers who threatened to expose the exchange’s alleged misappropriation of user funds. He faces 11 charges, including legal malpractice, breach of fiduciary duty, corporate waste and several counts of fraudulent transfers, according to the lawsuit.
“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.
They added, “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. 2022.
The amount of money FTX executives paid to keep insiders quiet is redacted in the complaint.
The company’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.