• FTX’s legal team is suing Sam Bankman-Fried (SBF), Zixiao Wang, and Nishad Singh for allegedly not performing sufficient due diligence before acquiring the stock-clearing platform Embed for $220 million.
• The attorneys allege that the offer of $1 million by Michael Giles, Embed’s founder and previous CEO, was too low and that FTX management exploited their weaknesses to acquire Embed.
• Twelve parties expressed interest in purchasing Embed but only one made a bid of $78 million.
FTX’s Legal Team Sues Top Executives
FTX’s legal team has filed a lawsuit against former CEO Sam Bankman-Fried (SBF), co-founder Zixiao Wang, and executive Nishad Singh over the acquisition of the stock-clearing platform Embed for $220 million. The attorneys claim that no proper due diligence was performed before finalizing the deal.
Allegations Against SBF, Wang & Singh
The lawyers allege that despite twelve separate parties expressing interest in buying Embed, only one made an offer—that of Michael Giles at $78 million. However, after careful consideration all but one withdrew their offers while Giles offered only $1 million to buy back control of Embed; taking home a total of $157 million from the FTX transaction as a result. Additionally, they claim that FTX management took advantage of their weaknesses in this area by using fictitious paperwork to conceal Alameda’s funding of the deal and knew about the company’s financial difficulties up until its collapse into bankruptcy.
Judge Approves Sale Of Assets
After filing for bankruptcy, the judge supervising the case approved the sale of assets including Embed; however it was sold at a much lower price than what had been previously offered by potential bidders.
Legal Action Taken By FTX
FTX has now taken legal action against SBF, Wang and Singh claiming that there was inadequate due diligence performed ahead of finalizing the acquisition agreement with Giles for just $1 million instead of significantly higher bids from other interested parties.
It remains to be seen what will come out from this case as more information becomes available regarding how much actual knowledge SBF, Wang and Singh had about FTX’s financial situation prior to signing off on such an important deal as well as whether or not there were any fraudulent activities conducted during negotiations leading up to its completion.