FTX Sues Former CEO Sam Bankman-Fried Over $220M Acquisition
FTX’s lawyers are taking action against ex-CEO Sam Bankman-Fried, co-founder Zixiao Wang, and former executive Nishad Singh over the $220 million acquisition of the stock-clearing platform Embed. The lawsuit alleges a severe lack of due diligence in the acquisition process.
The Aftermath of Bankruptcy and a Plummeting Bid
Following the company’s bankruptcy filing, the judge presiding over the case approved the sales of FTX assets, including Embed. However, the highest bid for Embed was a mere $1 million, reflecting a catastrophic 99.5% drop in value. This bid was placed by Embed’s former CEO, Michael Giles, who had allegedly profited greatly from the initial acquisition.
Allegations of Fraud and Misappropriation of Funds
FTX’s legal team accuses the named insiders of exploiting the company’s weak controls and recordkeeping to commit a large-scale fraud. The lawsuit alleges that these insiders misused customer funds to buy Embed, knowing full well that FTX was insolvent at the time.
A Call for Justice and Clawing Back Lost Funds
FTX is urging the courts to label the controversial transactions as “avoidable fraudulent transfers and obligations,” further seeking to have claims made by the defendants disallowed until the company can recover its lost funds.
A Possible Relaunch Amidst the Controversy
Despite the turbulent circumstances, FTX’s new leadership is contemplating a possible relaunch of the exchange, while prioritizing the recovery of funds to repay its customers and creditors.