FTX Takes Legal Action
In a dramatic twist to the FTX saga, the law firm representing the beleaguered cryptocurrency exchange has decided to go after former CEO Sam Bankman-Fried, along with co-founder Zixiao Wang and senior executive Nishad Singh. The charge? A dubious $220 million deal for the stock-clearing platform Embed, which apparently occurred with all the due diligence of a three-legged raccoon crossing a busy highway.
Little Due Diligence or Total Oversight?
According to a court filing dated May 17, FTX allegedly conducted “almost no due diligence” before splurging on Embed through its U.S. subsidiary. It’s the corporate equivalent of buying a used car with a “check engine” light blinking ominously—and turning it on anyway. The aftermath reveals that once the dust settled, the only bid that rolled in for Embed post-bankruptcy was a measly $1 million.
The Rise and Fall of Embed’s Value
FTX’s lawyers described the fate of Embed as a classic case of “nobody wanted what you’re selling.” Despite 12 entities expressing initial interest (with one even initially promising $78 million), all but one waved goodbye after doing a little homework. It turns out their due diligence was a lot more enlightening than FTX’s. Even Embed’s founder, Michael Giles, who once pocketed a cool $157 million from the acquisition, only deemed the wreckage worth $1 million. Talk about a hard fall from grace!
Accusations of Fraud and Mismanagement
But wait, it gets juicier. The lawsuit accuses FTX insiders of exploiting severe mismanagement and poor recordkeeping that paved the way for a “massive fraud” through unauthorized use of customer funds. They allegedly knew Embed was in deep financial trouble yet pressed ahead with the maneuver like it was a Black Friday sale. Ultimately, the lawyers aim to label these tangled transactions as “avoidable fraudulent transfers and obligations”. Sounds like the openings of a soap opera plot!
Clawing Back Funds and Future Prospects
Since filing for bankruptcy on November 11, 2022, FTX has taken a hard turn towards financial recovery. New leadership is clawing back funds to repay customers and creditors while entertaining thoughts of a comeback. Fingers crossed—and maybe some extra diligence next time, huh?
