Overview of the Proposed Settlement
The debtors of the now-defunct cryptocurrency exchange FTX have put forward a proposal for a separate settlement with former CEO Sam Bankman-Fried, specifically concerning the acquisition of the stock-clearing platform Embed. This proposal was filed on December 22 with the United States Bankruptcy Court for the District of Delaware.
Details of the Embed Acquisition
FTX US, a subsidiary of FTX, acquired Embed for $220 million in June 2022. The acquisition was executed with minimal due diligence, as highlighted by FTX’s legal representatives. As part of the deal, FTX issued two simple agreements for future equity to Sam Bankman-Fried.
Terms of the Proposed Agreement
The proposed settlement outlines that Bankman-Fried would return all assets and rights he gained through the equity agreements. This includes a relinquishment of his right to assets held in accounts at Embed. The agreement aims to recover the full value conferred upon Bankman-Fried through these agreements, benefiting FTX’s estate, creditors, and stakeholders.
Implications for the Bankruptcy Case
While this agreement focuses solely on the issues related to Embed and Bankman-Fried, it does not address all aspects of the bankruptcy case. FTX, which filed for bankruptcy in November 2022 following Bankman-Fried’s resignation and subsequent felony charges, is still navigating through various creditor claims.
Ongoing Efforts by FTX Debtors
In addition to this proposed settlement, FTX debtors have been actively working to manage the company’s assets. This includes a recent plan to pool assets with FTX Digital Markets, the firm’s Bahamian branch, as part of the strategy to distribute funds to customers. These actions represent the debtors’ continuous efforts to reorganize and repay creditors amidst complex legal proceedings.