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FTX Units Sue Former Executvies, Embed Shareholders to Retrieve $243M From Acquisition
The estate alleges FTX founder Sam Bankman-Fried and other "insiders" misappropriated company funds to acquire Embed in late September 2022, weeks before the crypto exchange filed for bankruptcy.
Updated May 19, 2023, 4:54 p.m. Published May 18, 2023, 9:35 a.m.
The estate for bankrupt crypto empire FTX is seeking to claw back around $243 million from a suite of former executives – including founder Sam Bankman-Fried – and Embed Financial shareholders, a broker-dealer acquired using FTX funds.
In three separate complaints filed to a Delaware bankruptcy court on Wednesday, the estate alleges that the "FTX insiders" – namely Bankman-Fried, Co-Founder Gary Wang, Director of Engineering Nishad Singh and Caroline Ellison, who ran the trading arm Alameda – used misappropriated FTX funds in late September to acquire Embed only weeks before the crypto exchange filed for bankruptcy.
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The complaints target the FTX insiders, Embed CEO Michael Giles, and several other former Embed equity holders.
Alameda and West Realm Shires (better known as FTX US) are seeking to reclaim money paid to Embed shareholders under U.S. bankruptcy laws, by asking the court to designate the funds as "fraudulent transfers," of the company's assets, so that they could be paid back to creditors.
FTX's new management has, in several court filings, alleged company funds were misused by former executives.
Read More: U.S. Court Asked to Reverse Decision to Not Appoint Independent Examiner in FTX Bankruptcy
CORRECTION (May 19, 14:00 UTC): Corrects headline and content of article to show clawback figures in full.
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