FTX’s former high lawyer Daniel Friedberg has co-operated with U.S. prosecutors as they examine the crypto agency’s collapse, a supply acquainted with the matter stated, including stress on founder Sam Bankman-Fried who was arrested on prison fraud expenses final month.
Friedberg gave particulars about FTX in a Nov. 22 assembly with two dozen investigators, the particular person stated. The assembly, held on the U.S. Lawyer for the Southern District of New York’s workplace included officers from the Justice Division, Federal Bureau of Investigation, and the U.S. Securities and Trade Fee, the supply stated. Emails between attendees scheduling the assembly with these companies had been seen by Reuters.
On the assembly, he instructed prosecutors what he knew of Bankman-Fried’s use of buyer funds to finance his enterprise empire, the supply stated. Friedberg recounted conversations he had with different high executives on the topic and offered particulars of how Bankman-Fried’s hedge fund Alameda Analysis functioned, the supply stated.
Friedberg’s co-operation has not been beforehand reported. He has not been charged and has not been instructed he’s underneath prison investigation, the supply stated. As a substitute, he expects to be referred to as as a authorities witness in Bankman-Fried’s October trial, the particular person stated.
Friedberg’s lawyer, Telemachus Kasulis, the FBI and FTX didn’t reply to requests for touch upon his co-operation. The SEC, the Division of Justice and Bankman-Fried’s spokesman declined to remark.
Bankman-Fried is accused of diverting billions of {dollars} in FTX consumer funds to Alameda to bankroll enterprise investments, luxurious actual property purchases, and political donations. On Tuesday, he pleaded not responsible in Manhattan federal court docket.
Manhattan U.S. Lawyer Damian Williams, who’s main the prison case in opposition to now bankrupt FTX, stated final month: “In case you participated in misconduct at FTX or Alameda, now could be the time to get forward of it.”
Two of Bankman-Fried’s closest associates, Caroline Ellison, Alameda’s former chief government, and Gary Wang, FTX’s former chief expertise officer, pleaded responsible to fraud and agreed to co-operate. A lawyer for Ellison didn’t reply to a request for remark. Wang’s lawyer declined to remark.
FTX filed for chapter safety on Nov. 11. A couple of days later, on Nov. 14, Friedberg obtained a name from two FBI brokers based mostly in New York. He instructed them he was keen to share data however wanted to ask FTX to waive his attorney-client privilege, in keeping with an individual acquainted with the matter and emails seen by Reuters.
Friedberg wrote to FTX the subsequent day asking the corporate to waive his privilege so he might co-operate with prosecutors, in keeping with the e-mail seen by Reuters. FTX didn’t achieve this, however agreed with Friedberg on the factors he might open up to investigators, the particular person stated.
Friedberg then wrote again to the 2 FBI brokers, telling them in an e-mail reviewed by Reuters: “I need to co-operate in all respects.”
The U.S. Lawyer’s Workplace arrange a gathering the place Friedberg signed so-called proffer letters ready for him by the SEC and different companies, in keeping with the supply and an e-mail exchanged by individuals. Proffer letters usually describe a possible settlement between authorities and people who’re witnesses or topics of an investigation.
Previous to his work advising FTX, Friedberg suggested a mixture of banking, fintech, and on-line gaming corporations.
Considered one of his earlier employers, a Canadian on-line gaming agency named Excapsa Software program, the place he was basic counsel, additionally drew controversy attributable to a dishonest scandal involving a poker web site it operated referred to as Final Wager. A Canadian gaming fee in 2008 fined Final Wager $1.5 million for failing to implement measures to stop fraudulent actions. Excapsa has since dissolved.
In accordance with an audio recording accessible on the web site PokerNews, Friedberg and another Final Wager associates privately mentioned that yr easy methods to deal with the scandal and decrease the quantity of refunds owed to gamers. Friedberg beforehand instructed NBC Information that the audio was illegally recorded however NBC’s article didn’t say that Friedberg challenged its authenticity.
Friedberg first represented Bankman-Fried in 2017 as outdoors counsel whereas at U.S. legislation agency Fenwick & West, the place he chaired its cost methods group, the supply acquainted with the matter stated. On the time, the supply stated Friedberg suggested Bankman-Fried on working Alameda, which he based that yr.
In 2020, when Bankman-Fried launched a separate change for U.S. prospects referred to as FTX.US, Friedberg moved in-house as FTX’s chief regulatory officer.
In a now-deleted weblog put up revealed that yr on FTX’s web site, Bankman-Fried wrote that Friedberg was FTX’s authorized adviser “from the very starting,” noting he had been “with us by thick and skinny.”
Friedberg resigned from his place on Nov. 8, a day after Bankman-Fried disclosed to high executives that FTX was virtually out of cash, in keeping with the supply and three different individuals briefed on the talks, together with textual content messages his authorized group exchanged on the time.
