Jan 5 (Reuters) – FTX’s previous major attorney Daniel Friedberg has cooperated with U.S. prosecutors as they look into the crypto firm’s collapse, a source acquainted with the matter said, adding stress on founder Sam Bankman-Fried who was arrested on criminal fraud rates very last month.
Friedberg gave particulars about FTX in a Nov. 22 meeting with two dozen investigators, the particular person reported. The meeting, held at the U.S. Attorney for the Southern District of New York’s office involved officials from the Justice Section, Federal Bureau of Investigation, and the U.S. Securities and Exchange Fee, the source said. E-mail among attendees scheduling the meeting with individuals businesses ended up observed by Reuters.
At the conference, he informed prosecutors what he realized of Bankman-Fried’s use of buyer resources to finance his enterprise empire, the supply explained. Friedberg recounted conversations he had with other top rated executives on the matter and presented details of how Bankman-Fried’s hedge fund Alameda Research functioned, the resource stated.
Friedberg’s cooperation has not been beforehand documented. He has not been charged and has not been advised he is below felony investigation, the supply said. Rather, he expects to be known as as a authorities witness in Bankman-Fried’s October trial, the person stated.
Friedberg’s law firm, Telemachus Kasulis, the FBI and FTX did not respond to requests for remark on his cooperation. 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 client money to Alameda to bankroll enterprise investments, luxurious actual estate purchases, and political donations. On Tuesday, he pleaded not responsible in Manhattan federal court.
Manhattan U.S. Attorney Damian Williams, who is top the criminal circumstance in opposition to now bankrupt FTX, mentioned very last month: “If you participated in misconduct at FTX or Alameda, now is the time to get forward of it.”
Two of Bankman-Fried’s closest associates, Caroline Ellison, Alameda’s former main executive, and Gary Wang, FTX’s previous chief technology officer, pleaded responsible to fraud and agreed to cooperate. A lawyer for Ellison failed to react to a request for remark. Wang’s law firm declined to remark.
Meeting WITH PROSECUTORS
FTX submitted for individual bankruptcy protection on Nov. 11. A couple days later, on Nov. 14, Friedberg obtained a connect with from two FBI agents centered in New York. He informed them he was willing to share data but necessary to ask FTX to waive his lawyer-client privilege, in accordance to a individual common with the matter and e-mails viewed by Reuters.
Friedberg wrote to FTX the up coming day asking the company to waive his privilege so he could cooperate with prosecutors, according to the e mail seen by Reuters. FTX did not do so, but agreed with Friedberg on the factors he could disclose to investigators, the particular person explained.
Friedberg then wrote back again to the two FBI brokers, telling them in an electronic mail reviewed by Reuters: “I want to cooperate in all respects.”
The U.S. Attorney’s Place of work established up a meeting wherever Friedberg signed so-termed proffer letters geared up for him by the SEC and other businesses, according to the source and an e mail exchanged by participants. Proffer letters commonly explain a probable settlement concerning authorities and individuals who are witnesses or topics of an investigation.
“Via THICK AND Slim”
Prior to his perform advising FTX, Friedberg encouraged a combine of banking, fintech, and on-line gaming providers.
One of his earlier businesses, a Canadian on the web gaming agency named Excapsa Software, wherever he was general counsel, also drew controversy thanks to a cheating scandal involving a poker web-site it operated known as Ultimate Bet. A Canadian gaming commission in 2008 fined Final Guess $1.5 million for failing to implement actions to stop fraudulent things to do. Excapsa has since dissolved.
In accordance to an audio recording accessible on the web-site PokerNews, Friedberg and some other Final Guess associates privately talked about that yr how to manage the scandal and limit the volume of refunds owed to players. Friedberg previously advised NBC Information that the audio was illegally recorded but NBC’s write-up did not say that Friedberg challenged its authenticity.
Friedberg very first represented Bankman-Fried in 2017 as exterior counsel even though at U.S. regulation organization Fenwick & West, wherever he chaired its payment techniques group, the resource familiar with the issue mentioned. At the time, the source reported Friedberg suggested Bankman-Fried on managing Alameda, which he established that 12 months.
In 2020, when Bankman-Fried launched a independent exchange for U.S. consumers termed FTX.US, Friedberg moved in-residence as FTX’s main regulatory officer.
In a now-deleted blog site write-up revealed that year on FTX’s web site, Bankman-Fried wrote that Friedberg was FTX’s authorized advisor “from the really starting,” noting he had been “with us via thick and thin.”
Friedberg resigned from his posture on Nov. 8, a day following Bankman-Fried disclosed to leading executives that FTX was practically out of revenue, in accordance to the source and three other men and women briefed on the talks, along with textual content messages his authorized team exchanged at the time.
Added reporting by Hannah Lang editing by Megan Davies and Anna Driver
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