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Sam Bankman-Fried’s (SBF) FTX Group reportedly disbursed over $25 million in confidentiality payments to seven whistleblowers prior to the catastrophic failure of the crypto exchange in November 2022, according to a significant report released by an independent examiner on Thursday.
FTX Whistleblowers Reached Settlement Agreements Before Collapse
Robert Cleary, the independent examiner responsible for the report, uncovered the now-resolved claims related to employee severance packages, as FTX did not document employee grievances.
As per Cleary’s findings, the investigation “ultimately identified settlement agreements amounting to over $25 million with seven whistleblowers who reported various misconducts at the FTX Group, with the majority of the funds allocated to five of those whistleblowers who raised concerns about systemic issues.”
The report further asserts that FTX Group neglected to investigate the whistleblowers’ allegations and instead opted to settle them for “substantial sums,” with the resolutions primarily managed by attorney Daniel Friedberg.
Reading the FTX examiner report, a thread:
Tabasco was aware of the gap in Alameda’s balance sheet and the necessity to keep it confidential as early as 2019.
Jail pic.twitter.com/bLaUtPHsYd
— Spreek (@spreekaway) May 23, 2024
One whistleblower (designated as Whistleblower-4) claimed that the crypto exchange “misled regulators and investors and lacked sufficient corporate structure” in a correspondence to Bankman-Fried, Friedberg, and FTX’s head of engineering Nishad Singh.
“Shortly thereafter, Friedberg informed Whistleblower-4 that he should not have sent the letter and, in particular, should not have implied that the FTX Group might not meet investor expectations,” the report indicated. “Friedberg additionally suggested that Whistleblower-4 apologize to Bankman-Fried.”
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Ultimately, the unnamed whistleblower purportedly consented to a $16 million settlement in September 2022, merely two months prior to the exchange’s downfall.
Another whistleblower, who worked as an attorney for FTX’s sister company, Alameda Research, was reportedly dismissed after he “expressed concerns about regulatory and governance matters at Alameda and its management of customer funds without a money transmitting license.”
Despite having been employed at Alameda Research for less than three months, the anonymous attorney received a $2 million settlement.
A third whistleblower was allegedly awarded a comparable $1.8 million settlement after working at FTX.US for just two months, following their concerns regarding “market manipulation and insider trading.”
Ryan Salame To Be Sentenced Following SBF FTX Conviction
The revelation of the report arrives ahead of former FTX executive Ryan Salame’s sentencing on Monday concerning criminal charges related to his involvement with the crypto exchange. Salame is the first FTX executive, apart from Bankman-Fried, to face sentencing for his offenses.
In the meantime, Bankman-Fried is currently serving a 25-year prison sentence for orchestrating the multi-billion dollar fraud and has been mandated to pay $11 billion in forfeiture.
The claims made by the whistleblowers further underscore Bankman-Fried’s frantic efforts to conceal his wrongdoing, which ultimately proved futile, leading up to FTX’s collapse.
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