The Seattle attorney linked to George Santos and the FTX crypto scandal
Table of Contents
Through his run for Congress very last 12 months, scandal-plagued Rep. George Santos obtained only a handful of campaign donations from Washington people.
Seattle legal professional Daniel Friedberg was the most important contributor to the New York Republican, providing the highest allowable $5,800 past June to Santos, who, hardly two months soon after taking business, faces legal and ethics probes into his falsified biography and shady marketing campaign funds.
Friedberg, who has practiced legislation in Washington for much more than two many years, is also linked to a a lot more sizeable national scandal, a single that may well aid describe his Santos donation.
Until finally not long ago, Friedberg was chief compliance officer for FTX, the collapsed cryptocurrency exchange whose executive, Sam Bankman-Fried, was arrested in the Bahamas in December and charged by federal prosecutors with a large fraud and money laundering plan. Friedberg has not been billed.
A class-action lawsuit submitted in a Florida federal court docket accuses Friedberg of encouraging Bankman-Fried protect up $8 billion in buyer losses at the formerly highflying enterprise, which abruptly submitted for Chapter 11 bankruptcy in November.
While he’d almost never designed political donations previously, Friedberg was between many leading FTX executives who contributed past 12 months to Santos’ campaign, Federal Election Fee filings exhibit.
How did a rather very low-profile Seattle lawyer, who specialised in banking and on-line gambling right before moving into the crypto entire world, wind up linked to two of the most talked-about tales in business enterprise and politics?
Friedberg isn’t saying significantly.
In an electronic mail this 7 days, he stated he donated to Santos on the suggestion of a good friend. “Obviously he’s a terrible candidate but this was unknown to me at the time,” he stated.
Friedberg said he had “no even further comment” and did not reply to concerns about his role at FTX. A guy who answered the doorway at his Queen Anne property and office environment this week claimed Friedberg was not there and was unavailable to discuss with a reporter.
Although he’s never created headlines locally, this isn’t Friedberg’s 1st brush with controversy. In 2008, he worked for an online poker firm that went below following currently being embroiled in a cheating scandal.
Friedberg is reportedly cooperating with federal prosecutors probing FTX and Alameda Investigation, the crypto hedge fund also founded by Bankman-Fried. In accordance to a report by Reuters, Friedberg achieved in November with two dozen investigators at the workplace of the U.S. Attorney for the Southern District of New York.
On the other hand, Friedberg is amid the FTX insiders staying sued in a class-action civil lawsuit submitted on behalf of “thousands, if not millions” of individuals who acquired cryptocurrency accounts with FTX, in accordance to a complaint submitted in U.S. District Court for the Southern District of Florida.
The lawsuit accuses FTX of a “fraudulent scheme” that bilked “unsophisticated traders from across the world,” luring them with phony promises of revenue and safety, in advance of collapsing in a Ponzi plan-like household of cards.
In addition to Bankman-Fried, Friedberg and 4 other FTX executives, the lawsuit names as defendants a number of movie star endorsers who publicly promoted the cryptocurrency company in advertisements, which includes NFL quarterback Tom Brady, former NBA star Shaquille O’Neal and actor and comic Larry David.
An amended complaint submitted in the Florida lawsuit very last month alleges Friedberg was “instrumental in perpetrating [FTX’s] nefarious routines, in section by supporting to include up any indications that the FTX scheme was unraveling.”
As FTX’s chief regulatory officer, Friedberg “was tasked with checking buyer defense techniques, guaranteeing products choices complied with current guidelines and overseeing interior audits and testimonials. He did none of this,” the criticism states.
Friedberg, in a the latest authorized filing, portrayed himself as unaware of any fraud at the enterprise and mentioned he, as well, is a sufferer, owning missing hundreds of 1000’s of pounds in crypto property.
The declaration, filed final thirty day period in FTX’s bankruptcy case, sheds light on how Friedberg received involved with the corporation, even though assigning blame to other insiders for allegedly concealing its precarious monetary place.
Friedberg wrote that he was introduced to Bankman-Fried by the FTX founder’s father, Joseph Bankman, a distinguished tax legislation professor at Stanford College.
Friedberg, 52, has been licensed to observe law in Washington given that 1998. He specialized in economical regulatory issues for consumers including banking institutions, online gaming firms and cell payment vendors, in accordance to an on the internet biography. The condition bar association’s authorized listing lists no disciplinary action towards him.
Friedberg joined FTX in March 2020 from the Seattle office of Fenwick & West, exactly where he’d led the regulation firm’s cryptocurrency practice.
Although at Fenwick, Friedberg vouched for Bankman-Fried to at least one likely lender at a time when FTX was trying to get buyers, dangling claims of 20% yearly returns, according to The Wall Avenue Journal.
“We know the owner of Alameda and think about him of the highest name in the field,” Friedberg wrote to the possible financial institution on Fenwick & West letterhead, the WSJ reported.
Started in 2019, FTX, run mainly by 20-somethings, was seemingly rolling in dough within a pair of years, attracting a million buyers to its crypto exchange, tapping celebrity endorsements and airing a well-known 2022 Super Bowl advert.
But now, Bankman-Fried sits in property detention in California on a $250 million bond signed by his mother and father, as he awaits demo on costs he looted consumer deposits to make dangerous investments, get property and make political donations. He has pleaded not responsible.
Friedberg, in his declaration, claimed he was blindsided by the company’s unexpected implosion. He claimed “certain FTX personnel” in the Bahamas were advised about $8 billion in lacking trader dollars Nov. 7.
An additional FTX law firm contacted him on a Zoom simply call “to tell me of this shocking advancement,” Friedberg recalled. Just before the disclosure, “I experienced no notion of any buyer deficit,” he said, adding that it wasn’t his career to watch FTX’s economical reserves.
“I relied on the executives, the finance staff, and the auditors, and believed that the shopper belongings were completely funded,” he wrote.
Friedberg stated he resigned the next day just after finding out that other FTX executives and lawyers had been conscious of the $8 billion shortfall, with a person telling him he was contacting “all the billionaires that he knew” to test to get unexpected emergency funding.
Friedberg reported he dropped own investments in the collapse of FTX, citing additional than $500,000 really worth of bitcoin and $400,000 worth of Solana, another cryptocurrency, he’d placed in FTX accounts that are no for a longer time obtainable.
Friedberg’s Santos donation stands out because he has practically never given to political candidates. In point out and nearby races, his only recorded donation was a $225 test to then-Seattle Mayor Mike McGinn’s reelection marketing campaign in 2013. McGinn said very last week he does not bear in mind Friedberg.
In addition to Santos, Friedberg gave $2,900 very last June to one more Republican congressional prospect in New York: Michelle Bond, a Donald Trump-endorsed crypto advocate who misplaced in the primary. Bond was relationship FTX co-CEO Ryan Salame and was paid out $400,000 for consulting by the firm. Quite a few other FTX executives also donated to her marketing campaign.
People donations to Republicans stood in contrast to Bankman-Fried’s significant contributions in help of Democratic candidates. He used about $40 million on political donations in 2022, earning him between the largest donors in the region.
Amid the recipients have been U.S. Sen. Patty Murray, U.S. Rep. Kim Schrier, D-Sammamish, and the Washington Point out Democratic Bash. Murray and Schrier have donated the funds they been given to charities.
In the wake of FTX’s downfall, those people who adhere to the environment of on the internet gambling have mentioned similarities in Friedberg’s past work for a Canadian program business whose poker system was exposed in a major cheating scandal.
The company’s Ultimate Guess online poker site was discovered in 2008 to have supplied an unfair benefit to certain players who were being in a position to see playing cards held by opponents. The exploit reportedly took as considerably as $50 million from hundreds of victims, such as actor Ben Affleck.
Friedberg was recorded in a discussion posted on the web in 2013 talking with other Ultimate Wager insiders about blaming the scandal on a computer software hack and reducing refunds, in accordance to an investigative report by NBC Information, which stated Friedberg’s “unusual résumé … raises concerns about why he was picked for vital jobs” at FTX.
Gambling regulators fined Ultimate Bet $1.5 million and ordered refunds of $22 million to influenced gamers, according to PokerNews, a gaming news internet site that has thoroughly covered the FTX, Friedberg and Final Bet connections.
Following its collapse, Ultimate Bet’s web-site morphed — into a crypto web-site.
Seattle Occasions News researcher Miyoko Wolf contributed to this report.