According to examiner Robert Cleary, one of the whistleblowers was described as an executive at FTX.US.
U.S. Bankruptcy Judge John Dorsey appointed Robert Cleary, who prosecuted the popular Unabomber case in the late 1990s, as an examiner for FTX after an appeals court ruled in January that the bankrupt exchange needed to be examined by an independent examiner.
In addition, an anonymous whistleblower noted that FTX “misled regulators and investors and lacked an adequate corporate structure. The anonymous whistleblower also pointed out that these security concerns were reported to the exchange’s CEO, Sam Bankman-Fried, Nishad Singh’s former engineer, and former lawyer Dan Friedber, causing anger among executives.
“Shortly thereafter, Friedberg told Whistleblower-4 that he should not have written the letter and, in particular, should not have suggested that FTX Group might not meet investor expectations. Friedberg further suggested that Whistleblower-4 “apologize to Bankman-Fried.” He referred to the report of auditor Robert Cleary.
Similarly, he noted that the anonymous whistleblower subsequently resigned іn September 2022 and agreed tо a settlement with FTX worth more than $16 million.
It іs important tо note that following its collapse, the FTX exchange filed for Chapter 11 оf the United States Bankruptcy Code оn November 11, 2022, with debts tо major creditors totaling $3 billion.
Former FTX Employees Report Manipulation and Receive Multi-million Dollar Settlements
Another anonymous whistleblower alleging market manipulation and insider trading by FTX settled for $1.8 million after working at FTX.US for less than two months at a salary of $200,000.
In addition, another whistleblower was offered a $200,000 settlement after alleging “crypto market manipulation” by the bankrupt exchange. Notably, examiner Robert Cleary noted that FTX did not have a complete list of employees at the time of the bankruptcy filing.
“Further complicating matters in this case, exchange employees resigned informally, including verbally and through the Signal app.” The examiner noted.
For reference, hundreds of employees resigned before the exchange collapsed in 2022, including former FTX.US president Brett Harrison, who resigned in September 2022, and former Alameda Research co-CEO Sam Trabucco, who resigned in August 2022.
In addition, former FTX.US president Brett Harrison responded to the auditor’s report in X on Thursday.
“They did not pay me $16 million and I did not sign any agreement other than my exit agreement, both facts are verifiable. “I was allowed to retain a portion of my equity in the company upon exit, and my exit agreement included standard non-disparagement and non-disclosure provisions.” Brett Harrison responded to Robert Cleary’s report.
It is important to note that after FTX collapsed in 2022, a New York jury found Sam Bankman-Fried guilty on all seven counts of defrauding FTX customers, lenders, and investors, and he was subsequently sentenced to 25 years in prison.
By Audy Castaneda
