Bankrupt crypto exchange FTX is seeking to regain more than $240 million that it paid for the stock trading platform Embed. The company said former FTX insiders did not conduct any kind of probe before purchasing the worthless and bug-ridden software platform. The company filed a total of three lawsuits on Wednesday in the US Bankruptcy court in Delaware. It is targeted at former insiders at the crypto exchange such as its indicted founder Sam Bankman-Fried, Embed executives and founder Michael Giles along with Embed shareholders.
In the lawsuits filed by the FTX, the company has levelled allegations of misappropriation of company funds by Bankman-Fried and other FTX insiders in order to acquire stakes in Embed as part of the transaction, reported Reuters.
This comes as the new management at the FTX has been seeking to recover assets in order to repay customers after the bankruptcy filing. And it is possible as the US laws allow debtors to regain payments that were made under some exceptional situations. However, those transactions must be done before going bankrupt.
After the money is recovered, it must be paid back to the creditors of the bankrupt company.
The lawsuits come after the crypto exchange tried to sell Embed, in which Giles was the highest bidder and offered only $1 million, reported Reuters.
ALSO READ: South Korean Crypto Exchanges Upbit, Bithumb Gets Raided: Here's What Happened
According to the lawsuit, FTX said, "The organisation's auction "leaves no doubt" that the $220 million it spent to acquire Embed was "wildly inflated relative to the company's fair value, which Giles well knew," as quoted by Reuters.
The FTX wanted to use Embed's software to merge stock trading to its crypto exchange platform. However, it could not do so as the software was "essentially worthless."
ALSO READ: Binance, World's Largest Crypto Exchange, To Cease Operations In Canada: Here's Why
The lawsuit, also stated that the FTX did not conduct any kind of concrete investigation into the matter and went ahead with "prioritised speed over all else."
Interestingly, Embed's own insiders were left very surprised after realising that the FTX paid so much for the organisation followed by a meeting with Giles.
Meanwhile, FTX has also paid over $70 million as retention bonuses for the Embed employees. But almost all of that was directed to Giles. Later on, he was concerned about how to defend his decision to allow $55 million bonus to different Embed shareholders.
Apart from all of these, the FTX is also trying to recover $236.8 million from Giles and Embed insiders. The recovery amount also includes another $6.9 million from the minority shareholders at Embed.
Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Cryptocurrency is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Cryptocurrency market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.