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An attorney with ties to a high profile poker cheating case became the Chief Regulatory Officer of FTX in 2020 and continues to serve in that role. That crypto exchange is now in some serious trouble.
Daniel Friedberg is the lawyer in question. Friedberg was once an attorney for Ultimate Bet during a superuser scandal in 2008, CoinGeek first reported back in August of last year. Poker players were bilked out of around $50 million by UB owner Russ Hamilton. That online poker site was later indicted by the U.S. Justice Department in April 2011 as part of a sweeping probe that also resulted in the indictments of PokerStars and Full Tilt Poker. The action would go on to be dubbed "Black Friday".
Friedberg's role in the 2008 scandal extended far beyond any legal assistance he may have provided.
Friedberg was allegedly overheard in an audio tape released in 2013 "actively conspiring with the other principals in attendance to (a) publicly obfuscate the source of the cheating, (b) minimize the amount of restitution made to players, and (c) force shareholders to shoulder most of the bill," writes Steven Stradbrooke of CoinGeek.
Friedberg's apparent ties to that cheating scandal are more relevant than ever with FTX struggling to stay afloat. Stradbrooke described Friedberg's role as FTX's Chief Regulatory Officer as "almost comically inappropriate".
FTX CEO Sam Bankman-Fried tweeted out Thursday morning that he is “sorry,” admitting that he “f---ed up” and “should have done better" as the exchange attempts to keep from going bankrupt. At one time earlier in the year FTX was valued at $32 billion. Some $5 billion was withdrawn from the exchange on Sunday alone, Bankman-Fried claims.
By Wednesday, he warned investors of an $8 billion shortfall and that FTX would require emergency funding.
“I also should have been communicating more very recently,” wrote Bankman-Fried. “Transparently--my hands were tied during the duration of the possible Binance deal; I wasn’t particularly allowed to say much publicly. But of course it’s on me that we ended up there in the first place.”
#FTX lmfao https://t.co/jN9esdJB2J
— Cryptica (@crypticaxyz) November 11, 2022
Bankman-Fried also revealed he will be shutting down Alameda Research, the trading firm he co-founded alongside FTX. This is the same Alameda Research company CoinGeek once noted helped Bankman-Fried to "become one of the single largest individual donors to Joe Biden’s 2020 presidential campaign". Stradbrooke questioned at the time the FTX CEO's motives for wishing to participate in crypto compliance discussions with the Biden Administration, sort of alluding to a wolf watching the sheep scenario.
Binance on Wednesday announced it would no longer entertain an acquisition of FTX.
They released this statement:
"As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of http://FTX.com."
FTX claimed via Twitter Thursday night that withdrawals "will resume shortly", without offering an estimated time frame.
- Nagesh Rath, Gambling911.com
