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

FTX Group Settled 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 by independent examiner Robert Cleary, Sam Bankman-Fried’s (SBF) FTX Group paid more than $25 million in confidential settlements to seven whistleblowers before the ill-fated collapse of the cryptocurrency exchange in November 2022.
Whistleblowers Reached Settlements with FTX Prior to Collapse
Cleary’s report, which was commissioned to investigate employee severance packages, revealed that FTX did not document employee complaints. The report uncovered “settlement agreements totaling more than $25 million with seven whistleblowers who alleged various improprieties at the FTX Group, with most of the funds going to five whistleblowers who raised concerns about systemic improprieties.”
The report also states that FTX Group failed to investigate the whistleblowers’ allegations and instead reached settlements for substantial amounts, with attorney Daniel Friedberg primarily handling the resolutions.
One of the whistleblowers, identified as Whistleblower-4, sent a letter to Bankman-Fried, Friedberg, and FTX’s head of engineering Nishad Singh, alleging that the crypto exchange had misled regulators and investors and lacked proper corporate structure. The report revealed that shortly after, Friedberg advised Whistleblower-4 that the letter should not have been written and that he should apologize to Bankman-Fried for suggesting that FTX Group may not meet investor expectations. In September 2022, just two months before the collapse, the whistleblower agreed to a $16 million settlement.
Another whistleblower, who worked as an attorney for FTX’s sister company, Alameda Research, was reportedly fired after raising concerns about regulatory and governance issues at Alameda and the handling of customer funds without a money transmitting license. Despite working at Alameda Research for less than three months, the anonymous attorney received a $2 million settlement.
A third whistleblower, who had only been employed 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’s release comes ahead of the sentencing of former FTX executive Ryan Salame, who faces criminal charges related to his role at the crypto exchange. Salame is the first FTX executive, other than Bankman-Fried, to be sentenced for his crimes.
Meanwhile, Bankman-Fried, who orchestrated a multi-billion dollar fraud, is currently serving a 25-year prison sentence and has been ordered to pay $11 billion in forfeiture.
These revelations from the whistleblowers only serve to highlight Bankman-Fried’s failed attempts to conceal his crimes in the lead-up to FTX’s collapse.
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