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>>FTX Group reportedly paid $25 million in settlement to whistleblowers prior to its collapse.

FTX Group reportedly paid $25 million in settlement to whistleblowers prior to its collapse.

crypthub

1/24/2025, 11:49:58 AM

Whistleblower Settlements at FTX Group

Sam Bankman-Fried’s FTX Group allegedly made substantial payments, totaling over $25 million, to seven whistleblowers before its collapse in November 2022, as revealed by an independent examiner's report. These settlements were part of an effort to cover up various improprieties within the company.

Investigation and Discoveries

Robert Cleary, the independent examiner, uncovered these payments while auditing severance packages for employee complaints that FTX had failed to properly record. The report highlights settlement agreements with seven whistleblowers who accused the FTX Group of systemic issues and mismanagement.

Handling of Whistleblower Claims

The report criticizes the FTX Group for failing to investigate these allegations adequately, instead opting for costly settlements. Daniel Friedberg, a lawyer, played a significant role in handling these resolutions. One notable case involved Whistleblower-4, who claimed misleadership and structural deficiencies at the crypto exchange; they received $16 million after Friedberg advised against raising specific concerns.

Specific Whistleblower Settlements

Another whistleblower, an attorney for Alameda Research (FTX's sister company), was terminated after raising regulatory and governance issues. They were awarded a $2 million settlement. Additionally, a third whistleblower, who worked briefly at FTX.US, received $1.8 million for expressing concerns about market manipulation and insider trading.

Implications and Sentencing

These revelations come amidst the upcoming sentencing of Ryan Salame, a former FTX executive, for his role in the exchange's collapse. Sam Bankman-Fried is already serving a 25-year sentence for orchestrating a multi-billion dollar fraud and ordered to forfeit $11 billion. The whistleblowers' settlements highlight Bankman-Fried's attempts to silence potential critics and cover up his criminal activities leading up to FTX's demise.