After Ray made the exchange’s internal audit public, the result shows that FTX owes its creditors around $7 billion.
It seems that this latest lawsuit against the ex-compliance chief will help the creditors gain their money back.
Daniel Friedberg is a licensed lawyer in the State of Washington who joined the FTX Group in January 2020.
His position was to serve as the chief compliance officer and general counsel.
However, last year November 9, he resigned from his position and 2 days after his resignation, John Ray III took over FTX from its CEO and founder Sam Bankman-Fried while filing for FTX’s federal bankruptcy petition in Delaware.
More Details of the Story
The new CEO and trustee for FTX Group, a bankruptcy cryptocurrency giant filed a filed legal action against ex-FTX compliance chief and general counsel Daniel Friedberg.
Allegedly, Friedberg played the part of a “fixer” who assisted in diverting billions to FTX Group’s insiders.
Also, he paid off the whistleblowers as well as their attorneys.
Furthermore, he gained around $3 million as a bonus and many more rewards for rendering his services to FTX for 22 months.
You can get the complaint redacted version here as entry #1727.
Allegedly, Friedberg has conflicts of interest that are related to Sullivan & Cromwell and Ryne Miller, FTX’s United States General Counsel.
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What Is Friedberg Facing In This Lawsuit?
Generally, this lawsuit brings strong accusations against Friedberg.
Supposedly, Friedberg was employed under FTX’s former CEO Sam Bankman-Fried.
According to Friedberg, Sullivan and Cromwell took advantage of the Chapter 11 insolvency process to generate high service fees from FTX.
This caused more than $40 million in charges alone since November last year.
It seems that Bankman-Fried employed Friedberg due to his father’s insistence who thinks that FTX required a committed overseer or a person that can take charge of everything.
He was supposed to be compensated with $300, 000 as an annual salary, $1.4 million as a signing bonus, and an 8% stake in the FTX United States.
In addition, he will be given a $3 million bonus in 2021 as well as Serum tokens worth $30 million.
The lawsuit also states that Friedberg is related to multiple Shell companies which were set up for FTX to open accounts.
One of the shell companies has a fake website that sells electronic goods without any link with Alameda or FTX.
Reportedly, Friedberg also made hush-money settlements to silence possible legal threats.
He was also implicated in preparing huge loan agreements for the FTX ‘s founders.
