Former FTX compliance chief, Daniel Friedberg, has agreed to collaborate with class action lawyers in a lawsuit against celebrities accused of promoting the bankrupt crypto exchange.
According to an amended complaint filed in a Florida District Court on May 11, 2023, Friedberg has provided evidence that promotional activities for FTX started in Florida. This testimony challenges a key defense raised by the defendants, who claimed that the court lacked jurisdiction due to a lack of connection to Florida.
Friedberg, who previously held positions as the chief compliance officer and top regulatory officer at FTX, stated that Avinash “Avi” Dabir, FTX US’s VP of business development, was responsible for managing the brand ambassadors for FTX, including the defendants in the case. These defendants include former NFL player Tom Brady, comedian Larry David, former basketball player Shaquille O’Neal, and FTX founder Sam Bankman-Fried. Friedberg also testified that Dabir worked in Miami and began his job at the FTX Miami office in early 2021.
The class action attorneys argued that this evidence contradicts the defendants’ claims that the alleged conspiracy was not “engineered in Florida” because FTX had not planned to move to Miami until September 2022. The attorneys sought to amend their case with this new evidence to address the defendants’ legal objections.
The lawsuit was initially filed shortly after FTX’s collapse in mid-November 2022. Businessman Kevin O’Leary, basketball player Steph Curry, and his team, the Golden State Warriors, are also among other alleged celebrity promoters involved in the case. If the court finds sufficient evidence in Friedberg’s testimony, it could significantly impact the outcome of the case.
Friedberg’s assistance has also been sought in other legal actions involving FTX. After the exchange’s collapse, investigators from the New York District Attorney’s Office, the Federal Bureau of Investigation (FBI), the Securities and Exchange Commission (SEC), and the Justice Department reportedly obtained information about FTX from Friedberg.
In another development on the FTX-Alameda Saga, the US Internal Revenue Service (IRS) has demanded a total of $44 billion from Alameda Research, FTX, and their affiliates in back taxes. The IRS released several documents on April 27 and 28, 2023, outlining the charges against the exchange and its affiliates. Notably, Alameda Research is accused of owing $20.4 billion in overdue partnership taxes and federal payroll taxes.
The tax authority labelled these claims administrative priority, which means they take precedence over the money owed to the creditors of the bankrupt exchange. As a result, the final implications of this situation will be decided by the ongoing battle over FTX’s outstanding debts.
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