The Seattle attorney connected to George Santos and the FTX crypto scandal
In the course of his operate for Congress past yr, scandal-plagued Rep. George Santos received only a handful of marketing campaign donations from Washington citizens.
Seattle legal professional Daniel Friedberg was the most important contributor to the New York Republican, giving the utmost allowable $5,800 past June to Santos, who, hardly two months immediately after using business office, faces prison and ethics probes into his falsified biography and shady campaign funds.
Friedberg, who has practiced law in Washington for much more than two many years, is also joined to a much more sizeable countrywide scandal, just one that may perhaps help demonstrate his Santos donation.
Until not long ago, Friedberg was main compliance officer for FTX, the collapsed cryptocurrency exchange whose govt, 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 course-motion lawsuit filed in a Florida federal courtroom accuses Friedberg of supporting Bankman-Fried go over up $8 billion in client losses at the earlier highflying organization, which abruptly filed for Chapter 11 individual bankruptcy in November.
Although he’d virtually under no circumstances built political donations beforehand, Friedberg was among several leading FTX executives who contributed last 12 months to Santos’ marketing campaign, Federal Election Fee filings present.
How did a fairly lower-profile Seattle attorney, who specialized in banking and on-line gambling just before relocating into the crypto entire world, wind up related to two of the most talked-about tales in small business and politics?
Friedberg isn’t saying significantly.
In an email this week, he mentioned he donated to Santos on the suggestion of a buddy. “Obviously he’s a terrible prospect but this was unknown to me at the time,” he said.
Friedberg explained he had “no further comment” and did not answer to questions about his purpose at FTX. A guy who answered the doorway at his Queen Anne property and office environment this 7 days reported Friedberg was not there and was unavailable to talk with a reporter.
While he’s never created headlines regionally, this isn’t Friedberg’s to start with brush with controversy. In 2008, he worked for an on the net poker firm that went beneath after being embroiled in a dishonest scandal.
Friedberg is reportedly cooperating with federal prosecutors probing FTX and Alameda Investigation, the crypto hedge fund also started by Bankman-Fried. In accordance to a report by Reuters, Friedberg achieved in November with two dozen investigators at the business office of the U.S. Lawyer for the Southern District of New York.
Nonetheless, Friedberg is between the FTX insiders staying sued in a class-action civil lawsuit submitted on behalf of “thousands, if not millions” of folks who bought cryptocurrency accounts with FTX, in accordance to a complaint filed in U.S. District Court for the Southern District of Florida.
The lawsuit accuses FTX of a “fraudulent scheme” that bilked “unsophisticated investors from across the world,” luring them with wrong guarantees of revenue and safety, in advance of collapsing in a Ponzi scheme-like dwelling of cards.
In addition to Bankman-Fried, Friedberg and four other FTX executives, the lawsuit names as defendants a number of superstar endorsers who publicly promoted the cryptocurrency business in ads, which includes NFL quarterback Tom Brady, former NBA star Shaquille O’Neal and actor and comedian Larry David.
An amended criticism filed in the Florida lawsuit very last thirty day period alleges Friedberg was “instrumental in perpetrating [FTX’s] nefarious things to do, in component by encouraging to address up any indications that the FTX scheme was unraveling.”
As FTX’s main regulatory officer, Friedberg “was tasked with monitoring customer protection tactics, guaranteeing item offerings complied with present procedures and overseeing interior audits and testimonials. He did none of this,” the complaint states.
Friedberg, in a current lawful submitting, portrayed himself as unaware of any fraud at the company and mentioned he, way too, is a victim, acquiring lost hundreds of countless numbers of bucks in crypto property.
The declaration, filed very last month in FTX’s bankruptcy case, sheds light-weight on how Friedberg got involved with the corporation, when assigning blame to other insiders for allegedly concealing its precarious economic posture.
Friedberg wrote that he was launched to Bankman-Fried by the FTX founder’s father, Joseph Bankman, a prominent tax regulation professor at Stanford University.
Friedberg, 52, has been accredited to apply legislation in Washington given that 1998. He specialised in money regulatory issues for shoppers such as banking institutions, on the internet gaming businesses and cell payment companies, according to an on the internet biography. The condition bar association’s authorized listing lists no disciplinary motion in opposition to him.
Friedberg joined FTX in March 2020 from the Seattle business office of Fenwick & West, where by he’d led the legislation firm’s cryptocurrency exercise.
Even though at Fenwick, Friedberg vouched for Bankman-Fried to at least a single possible lender at a time when FTX was searching for traders, dangling claims of 20% once-a-year returns, in accordance to The Wall Street Journal.
“We know the proprietor of Alameda and think about him of the optimum name in the marketplace,” Friedberg wrote to the likely lender on Fenwick & West letterhead, the WSJ documented.
Established in 2019, FTX, operate largely by 20-somethings, was seemingly rolling in dough within a pair of many years, attracting a million buyers to its crypto trade, tapping movie star endorsements and airing a well-known 2022 Super Bowl ad.
But now, Bankman-Fried sits in house detention in California on a $250 million bond signed by his mother and father, as he awaits trial on rates he looted shopper deposits to make dangerous investments, invest in 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 had been informed about $8 billion in lacking trader cash Nov. 7.
Another FTX lawyer contacted him on a Zoom simply call “to advise me of this shocking advancement,” Friedberg recalled. Prior to the disclosure, “I had no idea of any purchaser deficit,” he said, adding that it wasn’t his task to keep an eye on FTX’s fiscal reserves.
“I relied on the executives, the finance team, and the auditors, and believed that the client belongings were being totally funded,” he wrote.
Friedberg claimed he resigned the future working day following learning that other FTX executives and lawyers had been conscious of the $8 billion shortfall, with 1 telling him he was contacting “all the billionaires that he knew” to try to get unexpected emergency funding.
Friedberg stated he misplaced private investments in the collapse of FTX, citing more than $500,000 truly worth of bitcoin and $400,000 worthy of of Solana, yet another cryptocurrency, he’d placed in FTX accounts that are no for a longer period accessible.
Friedberg’s Santos donation stands out because he has pretty much in no way supplied to political candidates. In condition and regional races, his only recorded donation was a $225 check out to then-Seattle Mayor Mike McGinn’s reelection marketing campaign in 2013. McGinn stated very last week he doesn’t don’t forget Friedberg.
In addition to Santos, Friedberg gave $2,900 last June to one more Republican congressional candidate in New York: Michelle Bond, a Donald Trump-endorsed crypto advocate who shed in the main. Bond was courting FTX co-CEO Ryan Salame and was compensated $400,000 for consulting by the firm. Several other FTX executives also donated to her marketing campaign.
Individuals donations to Republicans stood in distinction to Bankman-Fried’s large contributions in guidance of Democratic candidates. He spent about $40 million on political donations in 2022, generating him among the the most important donors in the country.
Amid the recipients were being U.S. Sen. Patty Murray, U.S. Rep. Kim Schrier, D-Sammamish, and the Washington State Democratic Get together. Murray and Schrier have donated the dollars they acquired to charities.
In the wake of FTX’s downfall, individuals who follow the earth of on-line gambling have mentioned similarities in Friedberg’s previous function for a Canadian software package corporation whose poker platform was uncovered in a big cheating scandal.
The company’s Ultimate Wager on-line poker web-site was unveiled in 2008 to have supplied an unfair advantage to sure players who had been able to see cards held by opponents. The exploit reportedly took as a lot as $50 million from hundreds of victims, which include actor Ben Affleck.
Friedberg was recorded in a conversation posted on the internet in 2013 chatting with other Ultimate Wager insiders about blaming the scandal on a computer software hack and minimizing refunds, according to an investigative report by NBC News, which claimed Friedberg’s “unusual résumé … raises inquiries 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 impacted players, in accordance to PokerNews, a gaming information web page that has thoroughly lined the FTX, Friedberg and Supreme Guess connections.
Pursuing its collapse, Final Bet’s web site morphed — into a crypto web site.
Seattle Times Information researcher Miyoko Wolf contributed to this report.