• FTX sued ex-compliance officer Daniel Friedberg for allegedly misusing company funds, creating corporate entities to hide abuse, and suppressing whistleblowers‘ complaints.
• Friedberg served as Chief Compliance Officer at FTX, General Counsel at Alameda Research, and other internal and external positions.
• FTX accused Friedberg of creating an entity called North Dimension to commingle and misappropriate funds, creating a “sham” intercompany agreement to hide transfers when an audit was required before an IPO, and covering up whistleblower complaints about misuse of funds.
FTX Suing Ex-Compliance Officer
Cryptocurrency exchange FTX is suing its former compliance officer Daniel Friedberg for alleged misconduct. The court filing dated June 27 broadly alleges that Friedberg breached his fiduciary duties and engaged in misconduct while serving as the company’s Chief Compliance Officer.
Misuse of Funds Alleged
The filing accuses Friedberg of causing the waste of company assets and helping former FTX CEO Sam Bankman-Fried and other executives divert funds. Additionally, it alleges that he created an entity called North Dimension to commingle and misappropriate funds without authorization from the company. It also claims that he created a “sham” intercompany agreement in order to hide transfers when an audit was required prior to an initial public offering (IPO).
Cover Up Alleged
The filing further alleges that Friedberg covered up whistleblower complaints concerning the company’s misuse or commingling of funds. He had previously held positions such as General Counsel at Alameda Research in addition to his role at FTX.
FTX Seeking Damages
FTX is seeking damages from Friedberg for his alleged misconduct as well as legal costs related to this suit. The outcome remains uncertain but if found guilty on all counts, it could mean severe repercussions for him personally as well as professionally in the cryptocurrency space.
Conclusion
In conclusion, FTX has filed a lawsuit against their former compliance officer alleging multiple counts of misconduct which includes misuse of funds, creation of sham intercompany agreements to hide transfers during an audit process prior to IPO and covering up whistleblower complaints concerning the company’s misuse or commingling of fund . A ruling on this case will be awaited with interest not only by FTX but also by stakeholders in the cryptocurrency space overall