FTX Group Settles with Whistleblowers for $25 Million Prior to Collapse

FTX Group Settles with Whistleblowers for $25 Million Prior to Collapse


Julia Smith
Last updated:
May 24, 2024 13:33 EDT
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2 min read


According to a shocking report from independent examiner Robert Cleary, Sam Bankman-Fried’s (SBF) FTX Group paid more than $25 million in hush money to seven whistleblowers before the ill-fated crypto exchange collapsed in November 2022.
Settlement Deals Reached with FTX Whistleblowers Before Collapse
The report, conducted by independent examiner Robert Cleary, uncovered settled claims related to employee severance packages, as FTX had not documented employee complaints.
Cleary’s report revealed that “settlement agreements totaling more than $25 million” were reached with seven whistleblowers who raised various allegations of wrongdoing within the FTX Group. The majority of the settlement money went to five of the whistleblowers who made claims of systemic improprieties.
The report also stated that FTX Group failed to investigate the whistleblowers’ claims and instead resolved them for significant amounts. Attorney Daniel Friedberg primarily handled these settlements.
One whistleblower, referred to as Whistleblower-4, accused the crypto exchange of “misleading regulators and investors and lacking adequate corporate structure” in a letter addressed to Bankman-Fried, Friedberg, and FTX’s head of engineering Nishad Singh.
“Afterwards, Friedberg advised Whistleblower-4 that he should not have written the letter and specifically should not have suggested that the FTX Group may not meet investor expectations,” the report revealed. “Friedberg further proposed that Whistleblower-4 apologize to Bankman-Fried.”
Reportedly, the anonymous whistleblower eventually agreed to a $16 million settlement in September 2022, just two months before the exchange collapsed.
Another whistleblower, who worked as an attorney for FTX’s sister company, Alameda Research, was allegedly fired after raising concerns about regulatory and governance issues at Alameda and the handling of customer funds without a money transmitting license.
Despite having been employed at Alameda Research for less than three months, the unidentified attorney received a $2 million settlement.
A third whistleblower, who had only worked at FTX.US for two months, received a similar settlement of $1.8 million after raising concerns about market manipulation and insider trading.
Ryan Salame Faces Sentencing After SBF FTX Conviction
The report emerged just before the sentencing of former FTX executive Ryan Salame, who is facing criminal charges related to his involvement with the crypto exchange. Salame is the first FTX executive, other than Bankman-Fried, to be sentenced for his crimes.
Meanwhile, Bankman-Fried is already serving a 25-year prison sentence for orchestrating a multi-billion dollar fraud and has been ordered to forfeit $11 billion.
The whistleblowers’ claims further underscore Bankman-Fried’s desperate attempts to conceal his crimes, which ultimately failed as FTX collapsed.
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