• FTX, Alameda Research, and West Realm Shires have filed a lawsuit against the former management of FTX for mismanaging funds and failing to conduct proper due diligence before acquiring Embed.
• The lawsuit is to retrieve around $240 million connected to the acquisition of stock trading platform Embed Financial Technologies.
• The suit accuses former management of taking advantage of lax controls and inflating the value of Embed during negotiations with its founder Michael Giles.
FTX & Alameda Research Sue Former Executives
Crypto exchange FTX and its sister entity Alameda Research have sued their former executives Sam Bankman-Fried, Gary Wang, and Nishad Singh for mismanagement of funds and failure to conduct proper due diligence during the acquisition of stock trading platform Embed Financial Technologies.
Move To Recover Funds
The move is part of a series of lawsuits filed by FTX’s new leadership as they look to recover around $240 million connected to the transaction. This is the first formal action taken by current FTX CEO John Ray against the company’s former management and executives.
Details Of The Lawsuit
The defendants are accused in the lawsuit documents of taking advantage of lax controls and inflating the value of Embed during negotiations with its founder Michael Giles. It is alleged that they accepted all terms set by Giles, which led to them purchasing the platform for far more than it was worth – including an “extravagant retention bonus” for him – totaling around $248 million.
FTX Insiders Accused Of Negligence
The plaintiffs allege that while speed was prioritized over all else in purchase negotiations, no proper due diligence was conducted on Embed beforehand or any sort recordkeeping after it was acquired. Furthermore, they claim that there were no checks into whether or not Embed’s figures had been inflated in order to increase its sale price beyond what it should have been valued at.
The lawsuit seeks to recoup losses from FTX’s ill-fated acquisition which left them bankrupt weeks afterwards; however whether or not these allegations will be proved remains unknown until proceedings begin in earnest later this year.