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Our colleagues at CoinGeek this week report on just how involved one Dan Friedberg was with the now disgraced cryptocurrency exchange FTX.
First a little background: CoinGeek warned of Dan Friedberg's shady associations well before the FTX crypto exchange's epic collapse.
It was just a decade ago that audio surfaced whereby Friedberg appeared to be encouraging a coverup of the poker cheating incident that took place a few years before. Despite this, Friedberg was named Compliance Officer of the heavily touted darling of the cryptocurrency world, FTX. The company was touted by a whole host of celebrities that included the likes of Tom Brady and Larry David.
Steven Stradbrooke explained the convoluted funding scheme that appeared to be tied to FTX and that firm's founder Sam Bankman-Fried (SBF) and ultimately resulted in that exchange's biblical collapse late last year.
The SEC’s complaint against SBF cited the billions that FTX customers had indirectly deposited to the exchange via a convoluted workaround involving an Alameda subsidiary called North Dimension Inc. SBF directed customers to deposit via North Dimension, whose website offered no indication of any ties to FTX/Alameda, to disguise the fact that these funds were instead going to Alameda (the funds were then credited to FTX customer accounts but not actually transferred to FTX).
North Dimension was incorporated in Delaware in August 2020, its incorporation papers drawn up by none other than Friedberg’s Fenwick & West. Last week, NBC News reported further details on North Dimension’s now-disabled (but archived) website, noting that it “appears to have been a fake electronics retailer.”
Registered in Hong Kong in November 2021, North Dimension’s website is replete with garbled English and most internal links default to the ‘about’ page.
Fast forward to today and Stradbrooke offers up some more discouraging revelations.
On Monday, John J. Ray III, the court-appointed CEO of what’s left of FTX and its affiliated market-maker Alameda Research, filed its second interim report.
Ray’s first report, issued in April, laid out the damning history of “hubris, incompetence, and greed” that led to FTX, Alameda, and over 100 affiliated entities filing for bankruptcy protection last November, writes Stradbrooke.
Then there are these brutal findings:
The report contains a truly WTF graph of the sprawling web of entities utilized by FTX/Alameda to move money around. Ray notes that the “extensive commingling and misuse of funds” under the previous management has made it “extremely challenging to trace substantial assets of the Debtors to any particular source of funding, or to differentiate between the FTX Group’s operating funds and deposits made by its customers.”
Ray quotes a former Alameda employee’s statement that the FTX Group “made no meaningful distinction between customer funds and Alameda Funds.” Alameda was a going concern for over a year before the FTX exchange launched in April 2019, and FTX initially relied on Alameda’s bank accounts for customer deposits and withdrawals.
As for Friedberg, those who claim him to have been "the adult in the room", mainly because he didn't engage in the sex orgies and other party antics that allegedly took place all while Rome was burning, well.....
Stradbrooke details his apparent role.
The difficulties in obtaining secure banking relationships by FTX—and later Alameda—led to a greater role for a “senior FTX Group attorney,” identified in the report only as ‘Attorney-1.’ This low-flying legal eagle is credited with activities known to be associated with Friedberg, who formerly served as counsel for not only FTX but also for SBF in a personal capacity.
Friedberg has yet to be charged in this case, possibly because of his ongoing cooperation with the feds. But Ray’s report indicates there is ample reason to charge Friedberg, who appears to have learned no lessons from his notorious history of helping to cover up an insider cheating scandal at a now-defunct online poker company that stole millions from its players.
FTX claimed to welcome regulation, all the while seemingly running away from it.
When FTX Group companies moved from Hong Kong to the Bahamas in mid-2021, Attorney-1 “offered a former Bahamian government official, acting as an attorney, a $1 million ‘bonus’ to procure a necessary business license … within ten weeks.”
Stradbrooke paints a direct tie to Friedberg and the FTX fraud.
In January, NBC News reported on what appeared to be a fake electronics retailer bearing the North Dimension brand, with a ‘contact’ page that cited the same California address as FTX’s U.S.-based exchange FTX.US. North Dimension was incorporated in Delaware in August 2020 by the law firm of Fenwick & West, where Friedberg formerly served as chair of the firm’s payments practice division.
- Aaron Goldstein, Gambling911.com
