The collapse of FTX\. The role of online poker and Tether\.

The collapse of FTX. The role of online poker and Tether.

12 nov 2022

The failure of the FTX exchange and the cascade of subsequent events would not be complete without knowing the origin of this crisis. Its foundation was laid even within the structure of the company itself. Everyone talks about the curly-haired gambler Sam Bankman-Freedom and, of course, there is another, no less interesting character in the structure of the now deceased FTX. This is Daniel Friedberg.
He was responsible for the legal department of the company, in other words, his main purpose was to work with legal documents and deal with the licensing part of the business. Daniel was responsible for ensuring that FTX complied with all regulations and was not subject to ban in licensed jurisdictions.
This alone wouldn't be a problem, if one fact from his biography hadn’t been revealed. He had almost the same job in... UltimateBet. You are very lucky if the name of this site means nothing for you. Experienced poker players remember this poker room as it was the first room where falsification of RNG (the notorious “God mode”, when the site management had the opportunity to see opponents’ cards and “twist” the hand in any direction). In addition, this is the site which did not come to life after Black Friday, having died along with the bankrolls of players and royalties of investors.

So, Friedman was formally responsible in UB for the legal part of the poker room. In general, he seems to be doing his job well...
In the mid-2000s, he managed to mess with regulators’ brains, allowing UB to evade US regulators right until Black Friday. Daniel opened a fake front office in Canada, which in turn allowed to bring IPO on the London Stock Exchange, and then come to licensing in various offshore jurisdictions through a fictitious sale of Tokwiro Enterprises, and, ultimately, conduct a shadow merge with Absolute Poker.

Further, when the God-mode scandal occurred, in which UB co-owner Russ Hamilton was directly implicated, other dark moments with the participation of Friedberg surfaced. In secret negotiations that were initiated due to the detection of individual fraud at UB, Friedberg directly advised Hamilton to call himself not an accomplice, but a victim, saying, “Tell everyone that a former employee of the company took advantage of a server vulnerability by hacking a client and you suffered too."
Also, Friedberg discussed schemes with the rest of the UB executives to pay as little as possible to affected players. In general, this is far from the last story in which our hero "defends" the company from obvious crime. Even before the RNG cheating story, UB got into a credit card scandal, then there was a rather murky merger with Absolut Poker, which resulted in the (for a while) Cereus poker network.

After that, Friedberg moved from UB to AP in about the same position and continued to do the same things. As a result, in 2011, ahead of the "Black Friday", when the income stream of Absolute Poker, which should have amounted to millions of dollars, and enrich shareholders over the years of its existence... turned into a void. You probably already guessed who facilitated this.
However, this is not the saddest part. And not even the bankruptcy of FTX is. During his time at UB, Friedberg had several colleagues in the legal department. One of them is Sanford Millar. Now he (you won't believe it!) has his own legal practice in California on the regulation of cryptocurrencies. Friedman's second colleague also left online poker for crypto. His name is Stuart Hoegner and he currently holds the same position as Daniel Friedberg at FTX. Do you know where he currently works? In Tether.


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