The highest “regulatory officer” at fallen crypto exchange FTX once served as an attorney for an organization that was embroiled in a notorious online poker cheating scandal greater than a decade ago — and was caught on tape allegedly aiding the perpetrators of the fraud, based on reports.
Dan Friedberg — a lawyer who was FTX’s chief regulatory officer within the months leading as much as its collapse and who also did a stint as its general counsel — also had served as an attorney for UltimateBet, whose collapse was considered one in every of the largest online gambling scandals in history on the time.
Within the alleged scheme — which reportedly claimed actor Ben Affleck amongst its victims — employees between 2005 and 2008 were accused of using a software exploit dubbed “God mode” to bilk players out of anywhere between $20 million and upwards of $50 million.
The scandal drew coverage from CBS News’ “60 Minutes” and spawned a cult documentary called “UltimateBeat: Too Much To Lose.”
Friedberg, who reportedly resigned from FTX company earlier this month because it filed for bankruptcy, appears to have since scrubbed his LinkedIn account, which now displays a message “this page doesn’t exist”. Online bios for Friedberg said he joined FTX after a stint on the Seattle-based law firm Fenwick & West, where he chaired the payments systems practice.
FTX, meanwhile, has taken down an “about” page that listed short bios for its top executives, including disgraced ex-CEO Sam Bankman-Fried, FTX co-founder Gary Wang and Friedberg, in addition to links to their LinkedIn pages.
The UltimateBet scandal arose after revelations that a few of the site’s employees were using the software exploit to peek at online opponents’ cards during hands and bet accordingly.
In 2008, the Kahnawake Gaming Commission, the Canada-based regulatory body that licensed UltimateBet, said it “found clear and convincing evidence” that Russ Hamilton, a UltimateBet co-owner and consultant, “was the most important person responsible” for the scam, together with a handful of accomplices.
Friedberg’s involvement surfaced after recordings of his conversations with the poker site’s top brass was leaked to the general public in 2013. The recordings were taken during a gathering in early 2008 between Hamilton, Friedberg and other executives and were reportedly leaked by Travis Makar, Hamilton’s longtime assistant. Friedberg was never personally accused of wrongdoing and there isn’t any indication that he was ever even investigated by prosecutors or regulators.
Friedberg could be heard on tape discussing how UltimateBet should respond and handle media inquiries. Friedberg also advised company executives on a technique to limit payouts to victims by withholding the extent of the scheme.
“I feel, for the general public, it just needs to be, ‘Former consultant to the corporate took advantage of a server flaw by hacking into the client, unable to discover exactly when,’” Friedberg allegedly said on the tape, dictating a script in a bid to shortchange victims of the fraud.
Friedberg even advised Hamilton to say he also was a victim of the scandal because “otherwise it’s not going to fly.” He acknowledged on tape that the liquidator for Excapsa, the software firm that owned UltimateBet, had $47 million available for potential payouts – but that executives desired to limit the full to not more than $5 million.
“If we will get it all the way down to five, I’d be glad,” Friedberg added regarding potential payouts.
At one point within the recording, Hamilton admitted his guilt while directly addressing Friedberg.
“I did take this money and I’m not attempting to make it right, Dan, so we gotta get that out of the best way immediately, real quick,” Hamilton said.
The recordings were widely covered by poker media outlets after they first surfaced, including Poker News, which identified the connection between FTX, Friedberg and the UltimateBet scandal last week. Poker.org also posted a retrospective on Friedberg’s UltimateBet saga — and speculated about possible parallels with FTX.
“Friedberg would almost actually have served a crucial legal and functional role find ways to make FTX’s services and structure appear legitimate within the eyes of economic regulators across the globe,” Poker.org’s Haley Hintze wrote last week.
The Post couldn’t immediately be determine whether Friedberg had any disciplinary motion over his involvement with UltimateBet. A Daniel S. Friedberg with expertise in banking and securities remains to be listed as eligible to practice law on the Washington State Bar Association’s website.
In its 2008 segment, “60 Minutes” reported that “jurisdictional issues” had prevented any criminal charges from being filed against Hamilton or others implicated within the scandal. The audio tapes revealing Friedberg’s involvement didn’t surface until years after the Kahnawake Gaming Commission released its findings.
Bankman-Fried is alleged to have transferred $10 billion in FTX client funds to assist prop up Alameda Research, a cryptocurrency trading house he also owned. At the very least $1 billion of those funds remains to be missing.
In a court filing on Thursday, FTX’s latest CEO John Ray III, slammed what he described as a whole lack of regulatory guardrails at corporate oversight on the platform under previous leadership – and declared the situation was worse than what he encountered while steering infamous energy firm Enron through its bankruptcy.
“Never in my profession have I seen such a whole failure of corporate controls and such a whole absence of trustworthy financial information as occurred here,” Ray said within the filing.
Friedberg’s past raised alarm bells within the cryptocurrency sector long before FTX’s downfall. In August 2021, cryptocurrency news site CoinGeek noted that FTX’s decision to tap Friedberg as its chief regulatory officer was “almost comically inappropriate” given his past.
CoinGeek’s Steven Stradbrooke noted it “stays something of a mystery” how Friedberg “managed to avoid being disbarred” after the recordings surfaced.
“Friedberg’s presence on FTX’s payroll means Sam Bankman-Fried (SBF) either didn’t do his due diligence before hiring, or he knew of Friedberg’s past sins and didn’t care. Neither of those options paints Sam Bankman-Fried in a very flattering light,” Stradbrooke wrote.
Elsewhere, short-seller Marc Cohodes identified Friedberg’s involvement while predicting FTX’s downfall during a Sept. 3 appearance on the Hedgeye Investing Summit – a full two months before the platform crumbled.
On the time, Cohodes, who has a repute for uncovering fraud, argued that FTX was “dirty and rotten to the core.”
“In case you hit up Dan Friedberg’s LinkedIn, there’s no mention of his time on the poker site, there’s no mention of it, yet he’s the chief f—king regulatory officer of FTX, which is a giant f—king job,” Cohodes said.
“Either FTX knew they hired a chief regulatory officer who was a part of a card-cheating scandal, either they knew that, or he covered it up and got hired,” Cohodes added.
The Post has reached out to Friedberg, Bankman-Fried and FTX for comment.
To date, Friedberg has been quiet about what transpired at FTX despite his presumably large role within the firm’s oversight. A mention of his involvement surfaced in a recent Wall Street Journal article, which quoted a friend who had dinner with Friedberg the day of his resignation.
The source said Friedberg was “visibly shaken” throughout the dinner and that the ex-FTX attorney had showed them a text message he purportedly sent to Bankman-Fried, which read, “At some point I hope I can forgive you.”
The highest “regulatory officer” at fallen crypto exchange FTX once served as an attorney for an organization that was embroiled in a notorious online poker cheating scandal greater than a decade ago — and was caught on tape allegedly aiding the perpetrators of the fraud, based on reports.
Dan Friedberg — a lawyer who was FTX’s chief regulatory officer within the months leading as much as its collapse and who also did a stint as its general counsel — also had served as an attorney for UltimateBet, whose collapse was considered one in every of the largest online gambling scandals in history on the time.
Within the alleged scheme — which reportedly claimed actor Ben Affleck amongst its victims — employees between 2005 and 2008 were accused of using a software exploit dubbed “God mode” to bilk players out of anywhere between $20 million and upwards of $50 million.
The scandal drew coverage from CBS News’ “60 Minutes” and spawned a cult documentary called “UltimateBeat: Too Much To Lose.”
Friedberg, who reportedly resigned from FTX company earlier this month because it filed for bankruptcy, appears to have since scrubbed his LinkedIn account, which now displays a message “this page doesn’t exist”. Online bios for Friedberg said he joined FTX after a stint on the Seattle-based law firm Fenwick & West, where he chaired the payments systems practice.
FTX, meanwhile, has taken down an “about” page that listed short bios for its top executives, including disgraced ex-CEO Sam Bankman-Fried, FTX co-founder Gary Wang and Friedberg, in addition to links to their LinkedIn pages.
The UltimateBet scandal arose after revelations that a few of the site’s employees were using the software exploit to peek at online opponents’ cards during hands and bet accordingly.
In 2008, the Kahnawake Gaming Commission, the Canada-based regulatory body that licensed UltimateBet, said it “found clear and convincing evidence” that Russ Hamilton, a UltimateBet co-owner and consultant, “was the most important person responsible” for the scam, together with a handful of accomplices.
Friedberg’s involvement surfaced after recordings of his conversations with the poker site’s top brass was leaked to the general public in 2013. The recordings were taken during a gathering in early 2008 between Hamilton, Friedberg and other executives and were reportedly leaked by Travis Makar, Hamilton’s longtime assistant. Friedberg was never personally accused of wrongdoing and there isn’t any indication that he was ever even investigated by prosecutors or regulators.
Friedberg could be heard on tape discussing how UltimateBet should respond and handle media inquiries. Friedberg also advised company executives on a technique to limit payouts to victims by withholding the extent of the scheme.
“I feel, for the general public, it just needs to be, ‘Former consultant to the corporate took advantage of a server flaw by hacking into the client, unable to discover exactly when,’” Friedberg allegedly said on the tape, dictating a script in a bid to shortchange victims of the fraud.
Friedberg even advised Hamilton to say he also was a victim of the scandal because “otherwise it’s not going to fly.” He acknowledged on tape that the liquidator for Excapsa, the software firm that owned UltimateBet, had $47 million available for potential payouts – but that executives desired to limit the full to not more than $5 million.
“If we will get it all the way down to five, I’d be glad,” Friedberg added regarding potential payouts.
At one point within the recording, Hamilton admitted his guilt while directly addressing Friedberg.
“I did take this money and I’m not attempting to make it right, Dan, so we gotta get that out of the best way immediately, real quick,” Hamilton said.
The recordings were widely covered by poker media outlets after they first surfaced, including Poker News, which identified the connection between FTX, Friedberg and the UltimateBet scandal last week. Poker.org also posted a retrospective on Friedberg’s UltimateBet saga — and speculated about possible parallels with FTX.
“Friedberg would almost actually have served a crucial legal and functional role find ways to make FTX’s services and structure appear legitimate within the eyes of economic regulators across the globe,” Poker.org’s Haley Hintze wrote last week.
The Post couldn’t immediately be determine whether Friedberg had any disciplinary motion over his involvement with UltimateBet. A Daniel S. Friedberg with expertise in banking and securities remains to be listed as eligible to practice law on the Washington State Bar Association’s website.
In its 2008 segment, “60 Minutes” reported that “jurisdictional issues” had prevented any criminal charges from being filed against Hamilton or others implicated within the scandal. The audio tapes revealing Friedberg’s involvement didn’t surface until years after the Kahnawake Gaming Commission released its findings.
Bankman-Fried is alleged to have transferred $10 billion in FTX client funds to assist prop up Alameda Research, a cryptocurrency trading house he also owned. At the very least $1 billion of those funds remains to be missing.
In a court filing on Thursday, FTX’s latest CEO John Ray III, slammed what he described as a whole lack of regulatory guardrails at corporate oversight on the platform under previous leadership – and declared the situation was worse than what he encountered while steering infamous energy firm Enron through its bankruptcy.
“Never in my profession have I seen such a whole failure of corporate controls and such a whole absence of trustworthy financial information as occurred here,” Ray said within the filing.
Friedberg’s past raised alarm bells within the cryptocurrency sector long before FTX’s downfall. In August 2021, cryptocurrency news site CoinGeek noted that FTX’s decision to tap Friedberg as its chief regulatory officer was “almost comically inappropriate” given his past.
CoinGeek’s Steven Stradbrooke noted it “stays something of a mystery” how Friedberg “managed to avoid being disbarred” after the recordings surfaced.
“Friedberg’s presence on FTX’s payroll means Sam Bankman-Fried (SBF) either didn’t do his due diligence before hiring, or he knew of Friedberg’s past sins and didn’t care. Neither of those options paints Sam Bankman-Fried in a very flattering light,” Stradbrooke wrote.
Elsewhere, short-seller Marc Cohodes identified Friedberg’s involvement while predicting FTX’s downfall during a Sept. 3 appearance on the Hedgeye Investing Summit – a full two months before the platform crumbled.
On the time, Cohodes, who has a repute for uncovering fraud, argued that FTX was “dirty and rotten to the core.”
“In case you hit up Dan Friedberg’s LinkedIn, there’s no mention of his time on the poker site, there’s no mention of it, yet he’s the chief f—king regulatory officer of FTX, which is a giant f—king job,” Cohodes said.
“Either FTX knew they hired a chief regulatory officer who was a part of a card-cheating scandal, either they knew that, or he covered it up and got hired,” Cohodes added.
The Post has reached out to Friedberg, Bankman-Fried and FTX for comment.
To date, Friedberg has been quiet about what transpired at FTX despite his presumably large role within the firm’s oversight. A mention of his involvement surfaced in a recent Wall Street Journal article, which quoted a friend who had dinner with Friedberg the day of his resignation.
The source said Friedberg was “visibly shaken” throughout the dinner and that the ex-FTX attorney had showed them a text message he purportedly sent to Bankman-Fried, which read, “At some point I hope I can forgive you.”
