Bankrupt FTX Trading Ltd. is suing the former top compliance officer to the crypto empire, accusing the lawyer of helping company founder and alleged fraudster Sam Bankman-Fried raid customer funds.
Daniel Friedberg allegedly enabled top FTX Group managers to misuse billions of dollars of customer funds, according to the lawsuit filed last night in US Bankruptcy Court in Wilmington.
“Under the cloak of this wide-ranging con game, Friedberg and others facilitated the routing of billions of dollars in purported profits of the FTX Group to the FTX Insiders, and their families, friends, and other acquaintances through purported personal ‘loans,’ bonuses, ‘investments,’ and all other means of transfer, including real estate purchases and hundreds of millions of dollars in charitable and political contributions,” FTX said in the suit.
On Monday, FTX released an update on the alleged fraud that caused the company to fail. In that report, FTX managers said the transfer of customer funds was facilitated by a senior attorney whom it didn’t name.
Friedberg declined to comment. Bankman-Fried has pleaded not guilty to criminal charges related to FTX’s collapse.
The complaint is the latest filed by FTX to recover money the company says was wrongly transferred out of customer accounts. Last week, the company sued venture capital firm K5 Global and its principals in an effort to recover $700 million.
Read More: FTX Seeks $700 Million From Bankman-Fried’s Celebrity Connector
Both lawsuits are part of a broader effort by the company’s new CEO, John Ray, and his advisers to recover funds that can repay creditors, including customers whose cryptocurrency was held on the exchange before it collapsed in November. Bankruptcy rules let FTX recover payments made before the firm filed Chapter 11.
The case is FTX Trading Ltd., 22-11068, U.S. Bankruptcy Court for the District of Delaware.
(Updates with response from Friedberg in fifth paragraph.)
