(Kitco News) -
Daniel Friedberg, the former top lawyer and Chief Compliance Officer at FTX, began cooperating with government investigators just days after the exchange filed for bankruptcy, according to a Reuters report.
Friedberg resigned from his position at FTX on Nov. 8, a day after former CEO Sam Bankman-Fried told his top executives that the exchange was nearly bankrupt. Then, on Nov. 14, three days after FTX filed for Chapter 11 bankruptcy protection, Friedberg received a call from two New York-based FBI agents who wanted to question him about the firm’s collapse. Friedberg told them he was willing to talk but was still bound by attorney-client privilege.
On Nov. 15, Friedberg wrote to FTX telling them of his intention to cooperate with the government’s investigation and asking that they waive his privilege. FTX refused, but agreed on information that he could share with investigators. The report did not specify the name of his contact at FTX.
Friedberg then wrote back to the FBI agents saying, “I want to cooperate in all respects.”
Once they had secured his agreement, the U.S. Attorney's Office for the Southern District of New York (SDNY) arranged a meeting for Friedberg to sign so-called ‘proffer letters’ from the SEC and other government agencies outlining a potential agreement on his cooperation.
Then, on Nov. 22, Friedberg sat down with “two dozen investigators” at SDNY offices to share details about the implosion of FTX, Alameda and the rest of former CEO Sam Bankman-Fried’s crypto empire. The meeting included officials from the Justice Department, the Federal Bureau of Investigation, and the U.S. Securities and Exchange Commission, according to the report.
Friedberg told the investigators about Bankman-Fried's use of customer funds to finance his various business ventures, including conversations he had with other FTX executives about it, and also shared details about the inner workings of Alameda Research.
Friedburg has worked with Bankman-Fried since 2017 in various capacities. The report said that he has not been charged with any crimes and has not been told he is under criminal investigation. Friedberg is expected to be called as a key government witness in Bankman-Fried's criminal trial, which is scheduled to begin Oct. 2, 2023.
Former FTX and Alameda senior executives Gary Wang and Caroline Ellison have already pled guilty to fraud and are also cooperating with authorities. U.S. Attorney Damian Williams posted a brief video announcement on Dec. 21 announcing the guilty pleas by Ellison, the former CEO of Alameda Research, and Wang, who co-founded FTX with Bankman-Fried.
Bankman-Fried appeared in court on Jan. 3 to enter a plea of ‘not guilty’ on the eight criminal counts he faces. His legal team also submitted a letter to the court requesting that the identities of the two additional signatories to his bail, which must be completed by Jan. 5, not be made public.
Bankman-Fried was granted bail following his first appearance before a U.S. judge on Dec. 22. He was released on a $250 million bail bond and has been confined to his parents’ home in Palo Alto, California.
On Dec. 12, the Justice Department announced that they were charging Bankman-Fried with crimes including wire fraud, commodities fraud, money laundering and campaign finance violations, the penalties for which could total 115 years in prison.
