Claim BonusBreaking: FTX Sues Sam-Bankman Fried, Michael Giles, And Silicon Valley VCs
FTX filed multiple lawsuits in the U.S. Bankruptcy Court for the District of Delaware on May 17 to recover funds from former FTX executives including Sam Bankman-Fried and other parties that benefitted from Embed Financial Technologies’s acquisition.
FTX Trading (Debtors), along with Alameda Research and West Realm Shires (Plaintiff) sued former CEO Sam Bankman-Fried, Nishad Singh, and Gary Wang in a lawsuit. FTX also filed separate lawsuits to recover funds from Embed founder Michael Giles and venture capital firms.
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FTX Files Lawsuit Against Sam Bankman-Fried to Recover Funds
According to a lawsuit filed in the Delaware bankruptcy court, lawyers representing FTX, Alameda Research, and West Realm Shires seek to claw back $250 million from Sam Bankman-Fried, Nishad Singh, and Zixiao “Gary” Wang. Former executives used FTX customer funds to acquire Embed in March 2022.
The plaintiffs failed to conduct proper due diligence for Embed’s acquisition and overpaid for the acquisition. FTX insiders produced misleading records to cover Alameda’s role in funding the acquisition.
After four months of completing the Embed acquisition, no bidder is willing to pay more than $1 million. Among the 12 bidders, only one has submitted a final bid to buy Embed for only $250,000.
FTX also filed separate lawsuits to claw back funds from Embed founder Michael Giles and early investors that transferred equities and other assets to Sam Bankman-Fried and other parties involved in the acquisition.
The investors in the adversary cases include prominent Silicon Valley firms that held stakes in Embed, including Y Combinator, Bain Capital Ventures, and 9Yards.
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Sam Bankman-Fried Seeks Dismissal of Charges
Sam Bankman-Fried earlier this month asked U.S. District Judge Lewis Kaplan to dismiss most of the charges against him. SBF also believes a recent Supreme Court decision limiting the scope of fraud prosecutions makes him eligible for charges to be dismissed.
He says that some charges were based on a theory of fraud, but legal experts say that SBF’s chances of getting rid of the charges are still low.
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