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FTX’s ex-chief regulatory officer tied to on-line poker scandal

By Lauren Wilson Dec13,2022

The highest “regulatory officer” at fallen crypto change FTX as soon as served as an legal professional for an organization that used to be embroiled in a infamous on-line poker dishonest scandal greater than a decade in the past — and used to be stuck on tape allegedly assisting the perpetrators of the fraud, in step with studies.

Dan Friedberg — a legal professional who used to be FTX’s leader regulatory officer within the months main as much as its cave in and who additionally did a stint as its normal suggest — additionally had served as an legal professional for UltimateBet, whose cave in used to be regarded as probably the most greatest on-line playing scandals in historical past on the time.

Within the alleged scheme — which reportedly claimed actor Ben Affleck amongst its sufferers — staff between 2005 and 2008 have been accused of the usage of a instrument exploit dubbed “God mode” to bilk gamers out of anyplace between $20 million and upwards of $50 million.

The scandal drew protection from CBS Information’ “60 Mins” and spawned a cult documentary known as “UltimateBeat: Too A lot To Lose.”

FTX filed for chapter closing week.
Christopher Sadowski

Friedberg, who reportedly resigned from FTX corporate previous this month because it filed for chapter, seems to have since scrubbed his LinkedIn account, which now shows a message “this web page doesn’t exist”. On-line bios for Friedberg mentioned he joined FTX after a stint on the Seattle-based legislation company Fenwick & West, the place he chaired the bills techniques apply.

FTX, in the meantime, has taken down an “about” web page that indexed quick bios for its best executives, together with disgraced ex-CEO Sam Bankman-Fried, FTX co-founder Gary Wang and Friedberg, in addition to hyperlinks to their LinkedIn pages.

The UltimateBet scandal arose after revelations that one of the crucial website online’s staff have been the usage of the instrument exploit to peek at on-line warring parties’ playing cards all the way through arms and guess accordingly.

Right here’s the newest protection at the cave in of crypto massive FTX

In 2008, the Kahnawake Gaming Fee, the Canada-based regulatory frame that authorized UltimateBet, mentioned it “discovered transparent and convincing proof” that Russ Hamilton, a UltimateBet co-owner and guide, “used to be the primary individual accountable” for the rip-off, along side a handful of accomplices.

Friedberg’s involvement surfaced after recordings of his conversations with the poker website online’s best brass used to be leaked to the general public in 2013. The recordings have been taken all the way through a gathering in early 2008 between Hamilton, Friedberg and different executives and have been reportedly leaked via Travis Makar, Hamilton’s longtime assistant. Friedberg used to be by no means individually accused of wrongdoing and there’s no indication that he used to be ever even investigated via prosecutors or regulators.

Friedberg will also be heard on tape discussing how UltimateBet must reply and care for media inquiries. Friedberg additionally instructed corporate executives on a method to restrict payouts to sufferers via withholding the level of the scheme.

Dan Friedberg
Dan Friedberg used to be FTX’s regulatory officer.

“I believe, for the general public, it simply must be, ‘Former guide to the corporate took good thing about a server flaw via hacking into the buyer, not able to spot precisely when,’” Friedberg allegedly mentioned at the tape, dictating a script in a bid to shortchange sufferers of the fraud.

Friedberg even instructed Hamilton to say he additionally used to be a sufferer of the scandal as a result of “differently it’s no longer going to fly.” He stated on tape that the liquidator for Excapsa, the instrument company that owned UltimateBet, had $47 million available for doable payouts – however that executives sought after to restrict the overall to not more than $5 million.

“If we will get it down to 5, I’d be at liberty,” Friedberg added referring to doable payouts.

At one level within the recording, Hamilton admitted his guilt whilst at once addressing Friedberg.

UltimateBet gamers have been reportedly bilked out of $20 million or extra.

“I did take this cash and I’m no longer looking to make it proper, Dan, so we gotta get that out of the best way in an instant, actual fast,” Hamilton mentioned.

The recordings have been broadly coated via poker media shops once they first surfaced, together with Poker Information, which identified the relationship between FTX, Friedberg and the UltimateBet scandal closing week. additionally posted a retrospective on Friedberg’s UltimateBet saga — and speculated about conceivable parallels with FTX.

“Friedberg would nearly undoubtedly have served crucial criminal and purposeful function find tactics to make FTX’s services and products and construction seem authentic within the eyes of monetary regulators world wide,”’s Haley Hintze wrote closing week.

The Publish may no longer straight away be decide whether or not Friedberg had any disciplinary motion over his involvement with UltimateBet. A Daniel S. Friedberg with experience in banking and securities remains to be indexed as eligible to apply legislation at the Washington State Bar Affiliation’s web site.

In its 2008 phase, “60 Mins” reported that “jurisdictional problems” had averted any felony fees from being filed towards Hamilton or others implicated within the scandal. The audio tapes revealing Friedberg’s involvement didn’t floor till years after the Kahnawake Gaming Fee launched its findings.

Bankman-Fried is said to have transferred $10 billion in FTX shopper finances to assist prop up Alameda Analysis, a cryptocurrency buying and selling space he additionally owned. No less than $1 billion of the ones finances remains to be lacking.

In a courtroom submitting on Thursday, FTX’s new CEO John Ray III, slammed what he described as a whole loss of regulatory guardrails at company oversight on the platform below earlier management – and declared the location used to be worse than what he encountered whilst guidance notorious power company Enron thru its chapter.

Dan Friedberg instructed UltimateBet executives on how to answer the scandal.

“By no means in my occupation have I observed one of these entire failure of company controls and one of these entire absence of faithful monetary data as came about right here,” Ray mentioned within the submitting.

Friedberg’s previous raised alarm bells within the cryptocurrency sector lengthy earlier than FTX’s downfall. In August 2021, cryptocurrency information website online CoinGeek famous that FTX’s resolution to faucet Friedberg as its leader regulatory officer used to be “nearly comically irrelevant” given his previous.

CoinGeek’s Steven Stradbrooke famous it “stays one thing of a thriller” how Friedberg “controlled to keep away from being disbarred” after the recordings surfaced.

Sam Bankman-Fried
Sam Bankman-Fried is the disgraced ex-CEO of FTX.
by means of REUTERS

“Friedberg’s presence on FTX’s payroll method Sam Bankman-Fried (SBF) both didn’t do his due diligence earlier than hiring, or he knew of Friedberg’s previous sins and didn’t care. Neither of those choices paints Sam Bankman-Fried in an excessively flattering gentle,” Stradbrooke wrote.

In other places, short-seller Marc Cohodes identified Friedberg’s involvement whilst predicting FTX’s downfall all the way through a Sept. 3 look on the Hedgeye Making an investment Summit – a complete two months earlier than the platform crumbled.

On the time, Cohodes, who has a name for uncovering fraud, argued that FTX used to be “grimy and rotten to the core.”

“Should you hit up Dan Friedberg’s LinkedIn, there’s no point out of his time on the poker website online, there’s no point out of it, but he’s the executive f—king regulatory officer of FTX, which is a huge f—king activity,” Cohodes mentioned.

“Both FTX knew they employed a main regulatory officer who used to be a part of a card-cheating scandal, both they knew that, or he coated it up and were given employed,” Cohodes added.

The Publish has reached out to Friedberg, Bankman-Fried and FTX for remark.

To this point, Friedberg has been quiet about what transpired at FTX regardless of his probably huge function within the company’s oversight. A point out of his involvement surfaced in a contemporary Wall Boulevard Magazine article, which quoted a chum who had dinner with Friedberg the day of his resignation.

The supply mentioned Friedberg used to be “visibly shaken” all the way through the dinner and that the ex-FTX legal professional had confirmed them a textual content message he purportedly despatched to Bankman-Fried, which learn, “At some point I’m hoping I will forgive you.”

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