The FTX Group, led by Sam Bankman-Fried (SBF), reportedly paid over $25 million in hush money to seven whistleblowers before the cryptocurrency exchange’s collapse in November 2022. An independent examiner’s report, conducted by Robert Cleary, revealed that FTX settled claims with whistleblowers who raised concerns about various improprieties within the company. Most of the settlement money went to five whistleblowers who alleged systemic improprieties within the FTX Group. The report also found that FTX failed to properly investigate the whistleblowers’ claims and instead settled with them for significant amounts of money, primarily handled by attorney Daniel Friedberg.
One whistleblower, identified as Whistleblower-4, claimed that the crypto exchange misled regulators and investors and lacked adequate corporate structure. After sending a letter outlining their concerns to Bankman-Fried, Friedberg, and FTX’s head of engineering, Nishad Singh, the whistleblower was allegedly encouraged to apologize and ultimately agreed to a $16 million settlement two months before the exchange’s collapse. Another whistleblower, who was an attorney for FTX’s sister company, Alameda Research, raised concerns about regulatory and governance issues and customer fund handling without the necessary license. Despite a brief tenure at Alameda Research, the whistleblower received a $2 million settlement.
A third whistleblower, who had worked at FTX.US for a short period, raised concerns about market manipulation and insider trading and was granted a $1.8 million settlement. The report’s findings coincide with the upcoming sentencing of former FTX executive Ryan Salame on criminal charges related to his role at the crypto exchange. Salame is the first FTX executive, aside from Bankman-Fried, to be sentenced for crimes. Bankman-Fried, who is currently serving a 25-year sentence for orchestrating a multi-billion dollar fraud, has also been ordered to forfeit $11 billion. The whistleblowers’ claims shed light on Bankman-Fried’s attempts to cover up his crimes before FTX’s collapse.
The FTX Group’s alleged payment of hush money to whistleblowers raises questions about the company’s handling of employee complaints and internal improprieties, as revealed in the independent examiner’s report. The report, conducted by Robert Cleary, identified settlement agreements totaling over $25 million with seven whistleblowers who raised concerns about various issues within the FTX Group. The majority of the settlement money went to five whistleblowers who alleged systemic improprieties within the company, suggesting a pattern of misconduct that went unresolved.
The whistleblower settlements, as outlined in the report, point to a culture of secrecy and cover-up at FTX, with significant amounts of money paid out to individuals who raised legitimate concerns about regulatory compliance, corporate structure, and other issues. The report’s findings add another layer of complexity to the ongoing legal troubles facing former FTX executives, including Bankman-Fried and Salame. As legal proceedings continue and more details emerge about the company’s collapse, the role of whistleblowers in exposing internal wrongdoing at FTX will likely be a key focus of investigations and accountability measures moving forward.
