FTX wants to reclaim $ 250 million from SBF and executives in a new lawsuit
FTX wants to reclaim $ 250 million from SBF and executives in a new lawsuit
The bankruptcy cryptocurrency companies FTX, FTX.US and Alameda Research have filed a lawsuit against the former managers Sam Bankman-Fried (SBF), Nishad Singh and Gary Wang because they wasted the assets of the FTX Group for the takeover of the stock-clearing company Embed Financial Technologies.
The step is the first formal lawsuit by FTX CEO John Ray against the company's former management. The lawsuit submitted to the US insolvency court for the Delaware district aims to reclaim the funds issued during the takeover.
ftx sues SBF and its inner circle
According to the court document, the plaintiffs accused the former management of having exploited the lack of controls and records of the FTX Group to increase the value of embed and to have intentionally bought the platform at a higher price than it was worth.The accused, which are referred to as "FTX insiders", carried out hardly any or no DUE diligence tests at Embed, since they granted priority primarily in the transaction of the speed. They accepted all conditions that were proposed during the negotiation of Michael Giles, the founder and CEO of Embed, who was also the sole representative.
Giles left the deal with around $ 157 million and an “extravagant and unjustified customer loyalty bonus” as an incentive to complete the sale.
ftx began the takeover negotiations with Giles at the end of March 2022. Until mid-April of the same year, the parties signed the “Memorandum of Terms”, which Embed attributed a company value of $ 220 million with a binding bonus of $ 75 million to the platform employees, including $ 55 million to Giles.
When the deal was completed in September-a few weeks before the FTX Group's bankruptcy-the FTX insiders spent more than $ 248 million for taking over Embed. The plaintiffs claim that the deal took about six months, but had been negotiated and agreed within two weeks.
ftx wants to get $ 250 million back
In addition, the plaintiffs SBF, Singh and Wang accused the insolvent companies to issue Simple Agreements for Future Equity (Safes), which could be converted into regular shares in the event of an insolvency application.About his lawyers, Ray tries to revoke the safe and to reclaim the funds issued during the takeover of Embed. The plaintiffs have also requested that the court impose the costs of the legal dispute to the defendants.
In the meantime, the plaintiffs also submitted a contradictory lawsuit against Giles, the employees and former shareholders of Embed. Former shareholders include risk capital companies from the Silicon Valley such as Y Combinator, Bain Capital Ventures and 9yards.
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