In a groundbreaking legal case filed in Delaware bankruptcy court, it is alleged that Dan Friedberg, former Chief Regulatory Officer at FTX, played a key role in the embezzlement of billions of dollars in customer funds from the cryptocurrency platform. Friedberg, known for his involvement in the infamous UltimateBet online poker cheating scandal, is accused of acting as a personal “fixer” for disgraced FTX founder Sam Bankman-Fried. According to the lawsuit, Friedberg helped facilitate the “wholesale raiding of customer exchange deposits” and covered up complaints made by whistleblowers regarding the misuse of these funds. In some instances, he reportedly paid large sums of money to former FTX employees to keep them silent. This lawsuit comes as Bankman-Fried faces trial for various charges related to the alleged theft of FTX customer funds, as well as the use of these funds for risky investments, real estate purchases, and political donations. FTX officials claim that Friedberg received unjustifiable bonuses and compensation during his tenure at the company and are seeking to recover the money. The lawsuit also implicates Joe Bankman, Bankman-Fried’s father and a Stanford law professor, for personally vouching for Friedberg and advising his son to give him a prominent position at FTX. Both Friedberg’s attorney and Bankman-Fried’s representative have yet to respond to the lawsuit. Another filing from FTX officials earlier this week mentioned a senior attorney at FTX who facilitated the commingling of customer and corporate funds. While this filing did not name Friedberg directly, sources have identified him as the attorney referred to in the document. Prior to his involvement with FTX, Friedberg gained notoriety for his role as an attorney at UltimateBet, an online poker platform that collapsed due to revelations of insider cheating. The scheme, known as “God Mode,” allowed certain individuals to see hidden poker cards and defraud players of millions of dollars. Friedberg has faced scrutiny for his involvement in this scandal and was recorded in leaked audio coaching executives on minimizing restitution payments to victims. Although he was never charged with a crime for his work with UltimateBet, it is unclear if authorities or regulators investigated him. Friedberg has not been charged with any criminal offenses related to his time at FTX. However, it was reported in January that he is cooperating with federal authorities in their investigation into the company’s bankruptcy. Caroline Ellison, Bankman-Fried’s ex-girlfriend and founder of the failed cryptocurrency hedge fund Alameda Research, as well as two other former FTX executives, are also working with authorities.
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