FTX Sues SBF, Embed to Recover $240 Million it Spent on “Useless” Platform
According to a Thursday report, FTX filed three lawsuits pertaining to the bankrupt company’s acquisition of Embed, a stock trading platform, in 2022. FTX is allegedly seeking to claw back approximately $240 million. In the lawsuits, John J. Ray III described last year’s acquisition as “old-fashioned embezzlement.”
FTX Wants to Recover $240 Million From Embed Acquisition, Calls the Platform Uselless
The bankrupt cryptocurrency exchange FTX reportedly filed three lawsuits with regard to its 2022 acquisition of Embed on May 17th. The lawsuits are aimed at Sam Bankman-Fried, Embed stakeholders, and Embed’s co-founder Michael Giles along with other executives.
Considering the purchase of Embed was finalized mere weeks before FTX itself filed for bankruptcy, the company has the right to seek to claw back the money it spent under US law. Additionally, the platform was allegedly acquired at a severely inflated price without any prior research into its actual usefulness.
Reportedly, as a stock trading platform, Embed is both bug-ridden and generally useless. In total, FTX is seeking to claw back around $240 million from the acquisition—$236.8 million from Giles and other stakeholders, and another $6.9 million from minority stakeholders.
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Recovering FTX’s Missing Assets a “Herculean Investigative Effort”
Soon after FTX filed for bankruptcy—and as the scale of wrongdoing within the company became known—the question of how much of its assets can the current management even recover emerged. Only weeks after the company collapsed, the team headed by Ray even hired forensic investigators to help with the search for the missing money.
Despite a January report calling the effort to locate and secure the assets a “Herculean” task, 2023 has brought some cause for cautious optimism. The bankrupt exchange has released multiple reports on its progress and has even undertaken several actions in an attempt to recover its assets.
Perhaps the largest of these is the lawsuit against DCG’s Grayscale seeking to unlock up to $9 billion of FTX’s assets. Still, there have also been several setbacks, and some recent revelations, like the carefree way in which Sam Bankman-Fried discussed the loss and misplacement of tens of millions of dollars, still give sufficient cause for concern.
Editorial note (May 19th, 2023, 01:41 PM EST): The article was edited for clarity.
Do you think FTX will manage to recover the $240 million from Embed? Let us know in the comments below.