FTX leadership sues Sam Bankman-Fried over $220M deal made before bankruptcy

FTX lawyers are suing former CEO Sam Bankman-Fried, co-founder Jixiao Wang, and former senior executive Nishad Singh over its $220 million acquisition of stock-clearing platform Embed, alleging a lack of due diligence.

as of 17 May AdmissionFTX paid $220 million to acquire Embed through its United States subsidiary after allegedly doing “almost no due diligence” on the platform.

After FTX filed for bankruptcy, the judge in charge of the proceedings approved the sale of FTX’s Embed and other assets, but the top bidder for the platform offered only $1 million, FTX’s attorneys said. noticed:

“The bidders had discovered that FTX Group and FTX insiders had not bothered to conduct assessments prior to the Embed acquisition, namely that Embed’s acclaimed software platform was essentially useless.”

While 12 entities submitted non-binding indications of interest – the largest of which was $78 million – all declined to submit final bids after conducting more extensive due diligence, according to Embed’s founder and former CEO, Michael Giles.

According to FTX’s attorneys, Giles “personally received approximately $157 million in connection with the acquisition,” but his final bid to regain ownership of Embed was $1 million and was subject to a cut at closing.

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The lawyers additionally accused FTX insiders of “taking advantage of FTX Group’s lack of control and recordkeeping” by misappropriating customer funds to facilitate the purchase of Embed and knowing full well that the company was bankrupt. was when they were finalizing the deal.

The lawyers further alleged that misleading records were created to obscure Almeida’s role in financing the Embed acquisition, claiming that the money was transferred between FTX entities and not from Bankman-Fried, Singh and Wang. Came as claimed.

A screenshot from the filing shows a view of the flow of funds, according to FTX lawyers. Source: Kroll

FTX is seeking to label the transactions as “avoidable fraudulent transfers and obligations, and/or preferences,” further denying the claims made by the defendants that FTX was not through avoidable transfers. Can’t make up for lost money.

FTX filed for bankruptcy on November 11th, and since then its new leadership has been focused on retrieving funds to repay customers and creditors. It is also considering a possible relaunch of the exchange.

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