- The attorneys claim that no proper due diligence was performed before the deal was finalized.
- The stock-clearing platform Embed was acquired for $220 million.
Former FTX CEO Sam Bankman-Fried (SBF), co-founder Zixiao Wang, and executive Nishad Singh are being sued by FTX’s legal team. The stock-clearing platform Embed was acquired for $220 million, which is at the heart of the complaint. The attorneys claim that no proper due diligence was performed before the deal was finalized.
After FTX filed for bankruptcy, the judge supervising the case approved the sale of Embed and other corporate assets. However, the platform’s top bidder only offered $1 million. In the complaint, the attorneys for FTX claimed that “Embed’s vaunted software platform was essentially worthless,” explaining why they were suing Sam Bankman-Fried.
Weakness Exploited Claim
Twelve separate parties indicated interest throughout the procedures, with the greatest bid coming in at $78 million. However, after careful consideration, all but one of the bidders declined to make a final offer.
Only Michael Giles, Embed’s founder, and previous CEO, fit that description. Giles has offered $1,000,000 to buy back Embed. The crypto exchange’s legal team alleged that Giles took home $157 million from the FTX-Embed transaction. His last bid to reclaim control was just $1 million.
Moreover, the solicitors further claim that FTX management has exploited the FTX Group’s weakness in this area. They alleged the business had stolen customer money in order to pay for the Embed acquisition.
They further claim that the deal’s upper management knew the firm was bankrupt right up to the very end. The lawyers also alleged that Alameda’s funding of the Embed deal was concealed by using fictitious paperwork.
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