FTX seeks to claw back over $240mln from Embed acquisition
Bankrupt crypto exchange FTX is seeking to claw back more than $240 million it paid for stock trading platform Embed, saying former FTX insiders did no investigation before buying the essentially worthless bug-ridden software platform.
FTX filed three lawsuits late Wednesday in U.S. Bankruptcy Court in Delaware targeting former FTX insiders including indicted founder Sam Bankman-Fried, Embed executives including founder Michael Giles, and Embed shareholders. FTX alleged that Bankman-Fried and other FTX insiders misappropriated company funds to acquire stakes in Embed as part of the transaction.
FTX closed on the Embed acquisition just six weeks before the crypto exchange collapsed into bankruptcy in November. FTX lost billions in customer money while propping up its own risky investments, actions its current CEO John Ray called “old-fashioned embezzlement.”
FTX’s new management has been seeking to recover assets to repay customers since the bankruptcy filing. U.S. law allows debtors to claw back payments made under certain circumstances shortly before a bankruptcy filing and use those funds to repay other creditors.
FTX recently tried to sell Embed, but the highest bidder was Giles, who offered only $1 million.
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