The controversial bankruptcy of the crypto exchange FTX has once again grabbed attention as the company is now attempting to retrieve more than $240 million it previously paid for the stock trading platform Embed. This acquisition took place just six weeks before the exchange’s collapse, and subsequent bankruptcy filing.
It has been reported that FTX’s American branch, FTX.US, purchased Embed in mid-2022. However, representatives for FTX’s bankruptcy estate have now claimed that there was no proper investigation conducted by former company executives, including CEO Sam Bankman-Fried, before acquiring the stock trading platform.
Embed has been described as an “essentially worthless bug-ridden software platform” in a Reuters article published last Thursday. As a result, FTX’s new management has filed three lawsuits with the U.S. Bankruptcy Court in Delaware. These lawsuits target Bankman-Fried and other former FTX executives, Embed executives including founder Michael Giles, and Embed shareholders. The accusations made in these lawsuits allege that Bankman-Fried and the former insiders at FTX misappropriated company funds, which were used to acquire Embed.
When FTX recently attempted to sell Embed, they ended up scrapping the plan after the highest bidder offered merely $1 million, which is only around 0.4% of what FTX originally paid for the platform.
This legal fiasco is now part of a broader effort by FTX’s current management to recover assets that were lost during the exchange’s unsettling collapse. So far, their attempts to recover donations made to political candidates in the US have mostly been unsuccessful.
Despite these setbacks, there have been some successful strides made in recovering assets. An FTX attorney announced in April that the now-defunct crypto exchange has managed to recover over $7.3 billion in cash and liquid crypto assets, stating, “The situation has stabilized, and the dumpster fire is out.”
The ongoing turmoil surrounding FTX’s bankruptcy and Embed acquisition raises concerns regarding the lack of due diligence exercised by former executives. Conversely, the retrieval efforts by the current management are seen as essential steps towards regaining lost finances and rebuilding the company’s tarnished reputation. As the legal battles unfold, crypto enthusiasts and investors alike will be eagerly following developments to evaluate the implications of this event for the future of the blockchain industry.