FTX Bankruptcy and Legal Action
- The crypto exchange FTX has filed for bankruptcy and is now taking legal action to retrieve more than $240 million it paid for the stock trading platform Embed.
- FTX’s new management has filed three lawsuits with the U.S. Bankruptcy Court in Delaware targeting former FTX executives, Embed executives, and Embed shareholders.
- The lawsuits allege that FTX misappropriated company funds to acquire Embed, and are part of a wider effort by FTX’s current management to recover assets lost during the exchange’s collapse.
The crypto exchange FTX recently collapsed and subsequently filed for bankruptcy. This occurred only six weeks after the acquisition of Embed, a stock trading platform, by FTX’s American branch – FTX.US – which was done without any proper investigation according to representatives from FTX’s bankruptcy estate.
Legal Action Against Former Executives and Shareholders
FTX’s new management has taken legal action against Sam Bankman-Fried (the CEO) as well as other former insiders at FTX, Embed executives including founder Michael Giles, and Embed shareholders. The lawsuits allege that they misappropriated company funds in order to acquire the essentially worthless bug-ridden software platform of Embed.
Asset Recovery Efforts
As part of its asset recovery efforts, FTX has attempted to get back donations previously paid to political candidates in the US but these attempts have so far been unsuccessful. However, some success has been seen with over $7.3 billion cash and liquid crypto assets being recovered since then. In addition, an effort to sell off Embed failed when bidders only offered $1 million – less than 0.4% of what was originally paid for it.
In conclusion, while efforts to recover assets lost due to its collapse have had limited success so far, FTP is now trying a different approach by taking legal action against former insiders and shareholders who allegedly misused company funds prior to its collapse in order to acquire an essentially worthless software platform.