Legal Eruption in the FTX Camp
It seems that FTX’s new leadership has decided that enough is enough and is now charging ahead with legal actions aimed at returning a chunky $240 million to the company’s coffers. The target? Former executives and insiders who benefited from what FTX is calling a ‘wildly inflated’ acquisition of Embed, a stock-clearing platform, back in September. As if a corporate drama wasn’t entertaining enough, the plot thickens with lawsuits that have everyone raising their eyebrows.
The Acquisition That Raised Eyebrows
Reports reveal that FTX filed a lawsuit against its former CEO, Sam Bankman-Fried, for signing off on what they allege was a rather slapdash acquisition with minimal due diligence. The wild claim is that $220 million was paid for Embed, an amount that even elicited a response from Embed’s own chief technology officer, Laurence Beal, who seemed astounded at the price after a brief meeting with Embed’s CEO, Michael Giles.
“I get a sense that they are [cowboy emoji] over there,”
summed up Beal’s shocking reaction to FTX’s cavalier approach to the deal.
Retention Bonuses: ‘Keeping the Gang Together’ or ‘Making It Rain’?
As icing on this already over-iced cake, FTX doled out an eye-watering $70 million in retention bonuses to Embed employees, with $55 million of that going directly to Giles. For context, that’s like going to a fancy restaurant and ordering the whole menu. Giles was banking $490,000 every day during the acquisition period – all while his regular salary was a mere $12,500 a month. Talk about a hefty pay hike!
Disparities in Payment: One Lucky Insider
Irony alert: while most Embed employees were tethered to a two-year commitment to receive their full bonuses, Giles strolled away with his entire retention puff just on closing day. This has raised eyebrows and led to accusations of favoritism or, dare we say, corporate shenanigans.
Clawing Back Undeserved Gains
Now, with all the receipts in hand, FTX is gunning for a total of $236.8 million from Giles and other Embed execs, alongside an audacious $6.9 million from smaller shareholders. The overarching accusation is that they used FTX’s lack of controls to pull off some dubious financials while fully aware of FTX’s precarious financial situation when they wrapped up the deal.
FTX’s Grim Chapter 11 Reality
To add a gloomy note to this saga, FTX declared Chapter 11 bankruptcy in November 2022. The new leadership, which includes bankruptcy attorney John Ray III, is not just sitting on its hands; they are actively seeking ways to recoup funds to repay the beleaguered customers and creditors. Who knew that the world of cryptocurrency could serve such a dramatic narrative? Now, if only we could get a comment from Embed’s Michael Giles—maybe throw in some popcorn for the full effect.
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