According to a source with knowledge of the situation, Daniel Friedberg, the former head of FTX’s legal department, has assisted American prosecutors in their inquiry into the demise of the cryptocurrency firm. This puts additional tension on founder Sam Bankman-Fried, who was detained last month on suspicion of criminal fraud.
In a meeting with 20 investigators on November 22, Friedberg provided information about FTX, the source claimed. Officials from the Justice Department, the Federal Bureau of Investigation, as well as the U.S. Securities and Exchange Commission, attended the meeting, which was conducted at the offices of the U.S. Attorney for the Southern District of New York. Participants’ emails arranging the session with those entities were confirmed as accurate.
The source added that he revealed to the prosecution everything he knew about Bankman-exploitation Fried’s of client monies to fund his vast business empire. Friedberg gave facts about the operation of Bankman-hedge Fried’s fund Alameda Research and related talks he had with other senior officials.
The cooperation of Friedberg has not previously been mentioned. The source claimed that neither he nor anybody else has been informed that he is the subject of a criminal inquiry. Instead, the source added, he anticipates being called as a prosecution witness in Bankman-October Fried’s trial.
Inquiries on Friedberg’s mutual understanding with the FTX, FBI and lawyer Telemachus Kasulis went radio silent. Bankman-spokesperson, Fried’s the Department of Justice, and the SEC all declined to comment.
Bankman-Fried is accused of channelling billion-dollar FTX client monies to Alameda in an attempt to support business venture investments, extravagant real estate purchases, and political contributions.
He arrived at a not-guilty plea on Tuesday the 3rd in the federal court of Manhattan.
Last month, Manhattan U.S. Attorney Damian Williams warned that if someone engaged in misbehaviour at FTX or Alameda, now was the time to get forward of it. Damian Williams is overseeing the criminal case against the now-bankrupt FTX.
Two of Bankman-closest Fried’s supporters, Caroline Ellison, the former Chief executive of Alameda, and Gary Wang, the previous chief tech information officer of FTX, both admitted to fraud and agreed to work together.
A request for a retort from Ellison’s attorney went unrequited. Wang’s attorney chose not to comment.
On November 11, FTX requested bankruptcy protection. Friedberg got a call from two FBI agents located in New York a few days after, on Nov. 14.
An individual familiar with the situation and emails claimed to have seen it when he told them he was eager to disclose information but needed to request that FTX waive his attorney-client privilege.
The following day, as per an email obtained, Friedberg went to FTX asking the business to waive his confidentiality so he could help with investigators. However, the insider claimed that FTX did agree with Friedberg on the details he might reveal to investigators.
In a subsequent email that was reviewed, Friedberg replied to the two FBI agents and expressed his desire to cooperate in every way.
Based on the statement from the insider and an email sent by participants, the U.S. Attorney’s Office organised a meeting where Friedberg endorsed so-called proffer letters provided for him by the SEC and some other agencies. Proposal letters usually indicate a potential understanding between law enforcement and people who are eyewitnesses or the focus of an investigation.
Prior to helping FTX, Friedberg worked with a variety of fintech, banking, and online gaming organisations.
His former business Excapsa Software, a Canadian online games developer where he served as general counsel, attracted attention as a result of a cheating incident involving a card site it ran under the name of Ultimate Bet.
In 2008, a Canadian gaming commission penalized Ultimate Bet $1.5 million for failing to implement policies to stop fraud. Excapsa is no longer in existence.