FTX’s current management has sued the company’s former compliance officer, Daniel Friedberg, a dated court filing shows. June 27.
Friedberg would have failed in his duties
The filing generally alleges that Friedberg breached his fiduciary duties and engaged in misconduct. Friedberg previously served as chief compliance officer at FTX, general counsel at Alameda Research, and other internal and external roles.
Critically, FTX alleged that Friedberg caused the waste of company assets and helped former FTX CEO Sam Bankman-Fried and other executives embezzle funds.
FTX specifically said that Friedberg created an entity called North Dimension to mix and divert funds. He also alleged that when a planned IPO required an audit, Friedberg created a “fictitious” intercompany agreement to conceal the transfers.
Additionally, Friedberg was accused of “laundering” or covering up whistleblower complaints about the company’s misuse and mixing of funds. Friedberg allegedly fired and paid a whistleblower with severance pay.
Additionally, Friedberg also helped make billions of dollars in transfers to FTX executives and described those transfers as corporate loans. In fact, the alleged loans were not repaid and could not have been repaid, according to the filing.
In one section, FTX alleged that the former company was “insolvent at all relevant times” and had been “built on a house of cards” since its inception. FTX claimed Friedberg was supporting a scheme that defrauded and inconvenienced customers.
FTX seeks fines and damages
FTX, under its current leadership, is now seeking various fines, damages and damages from Friedberg. He also asked for the return of certain property with interest. The relevant amounts will be determined at an upcoming trial.
FTX filed the charges as part of the company’s ongoing bankruptcy proceedings in the United States Bankruptcy Court for the District of Delaware.
Other recent reports suggest that FTX is attempting to restart operations under its current management. The company owes its users $8.7 billion, the majority of which has been recovered despite past disappearances or hijackings.
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