An Utter Failure of Corporate Controls at FTX as Founder Agrees to Extradition

Written by:
Aaron Goldstein
Published on:

FTX founder Sam Bankman-Fried has signed extradition paperwork on Tuesday, paving the way for his return back to the U.S. where he faces charges as part of an eight-count indictment charging him with stealing billions from customers of and investors in the cryptocurrency exchange FTX.  Bankman-Fried waived his rights to a hearing on the matter.  Some reports suggest he fell asleep during a Monday court appearance.

Bankman-Fried was arrested in the Bahamas where he resided in an opulent mansion earlier this month. 

The United States House Committee on Financial Services heard of shocking mismanagement at the company at the time of the arrest, and after FTX and its sister trading house, Alameda, both filed for bankruptcy November 11. 

Not exactly shocking had anyone happened to read the shock report over a year ago that the firm's Compliance Officer was once tied to a high profile insider cheating scandal at an online poker site in 2008. Dan Friedberg was the attorney for Ultimate Bet at the time.  A recording surfaced years later whereby Friedberg can be heard discussing ways UltimateBet should respond and handle media inquiries, including the limitation of payouts to victims by withholding the extent of the scheme.  Friedberg currently resides in Seattle and is now named in a lawsuit brought against FTX and its executives.   He is not charged as part of the U.S. Justice Department indictment.

Information pertaining to Friedberg via the FTX LinkedIn page has since been scrubbed. 

The Securities Exchange Committee (SEC) also filed charges, alleging Bankman-Fried orchestrated a scheme to defraud equity investors in FTX.

Bankman-Fried has acknowledged risk-management failures at FTX, but has said he does not believe he has criminal liability.

- Aaron Goldstein, Gambling911.com


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