Daniel Friedberg, the former FTX “chief regulator” involved in the notorious online poker scam scandal, reportedly tapped Sam Bankman-Fried and cooperated with the feds in the epic crypto fraud case.
Friedberg, a member of Bankman-Fried’s inner circle and a key legal adviser at FTX, met with investigators on Nov. 22 and detailed how the disgraced founder used client funds to “fund his business empire.” knowledge of the matter.
The former FTX lawyer was also reported to have had conversations with other senior executives about the user of client funds, as well as the internal affairs of Bankman-Fried’s cryptocurrency hedge fund Alameda Research.
Friedberg’s involvement in FTX sparked alarm after The Post and others reported details of his behind-the-scenes work at UltimateBet — the poker site that collapsed after it was discovered that administrators used a software exploit called “God Mode” to capture players. Tens of millions of dollars from 2005 to 2008.
The scandal drew national headlines in 2008, including a lengthy segment on “60 Minutes.”
The FBI first contacted Friedberg on November 14, just three days after the FBI filed for bankruptcy. Friedberg resigned from his internal position at FTX on November 8 after learning the extent of the platform’s financial problems.
After the contact, Friedberg asked the FTX if he could waive his attorney-client privilege and speak to authorities. According to information, the FTX rejected the request, but allowed him to talk about certain points of knowledge.
“I am willing to cooperate in every way,” Friedberg told FBI agents in an email.
In addition to Friedberg, officials from the Department of Justice, the FBI and the Securities and Exchange Commission were among those attending the Nov. 22 meeting, according to the report.
Friedberg has not been charged with a crime or told he is under investigation in connection with the FTX case, the source said. According to Reuters, Friedberg expects to testify against Bankman-Fried during the criminal trial in October.
In a since-deleted blog post in 2020, Bankman-Fried described Friedberg as FTX’s legal advisor “from the beginning.” Friedberg also advised Bankman-Fried on how to manage Alameda during its launch.
As soon as the company collapsed, Friedberg quietly deleted his personal LinkedIn page. Separately, the FTX removed a bio page detailing Friedberg’s background.
According to The Post, Friedberg was an attorney for UltimateBet and was on tape advising executives on how to minimize compensation payments to defrauded poker players.
In leaked audio published in 2013 and still widely circulated online, Friedberg advised executives on a strategy of victim-switching by hiding the scope of the scheme and placing the blame on a fictitious ‘former consultant’ who exploited a server flaw. “
“I think for the public it should just be, ‘Former company consultant used server flaw to hack client, can’t pinpoint when'” script for executives to use.
Friedberg was never charged with a crime for his work with UltimateBet, and there is no indication that he was ever investigated by regulators or authorities.
When asked about his relationship with UltimateBet during an interview with NBC News in November, Friedberg said his meeting with officials was illegally recorded but did not dispute its authenticity.
Reuters reports that Friedberg’s lawyer Telemachus Kasulis, the FBI and the FTX did not respond to requests for comment. A spokeswoman for the SEC, DOJ and Bankman-Fried declined to comment.
In November, Ryan Salame, the former CEO of FTX Digital Markets, told officials in the Bahamas that FTX client funds were secretly transferred to “cover financial losses” at Alameda Research.
Bankmen-Fried’s ex-girlfriend, former Alameda Research CEO Caroline Ellison, is cooperating with the feds, as is FTX co-founder Gary Wang.
Bankman-Fried faces eight federal charges for allegedly funneling billions of dollars to FTX clients that were used to fund a lavish lifestyle and back risky bets in Alameda. The former billionaire pleaded not guilty in a Manhattan court earlier this week.