FTX's Creditors Propose Separation Litigation Over Embed Acquisition in Bankruptcy Case
Summary:
Creditors of the bankrupt cryptocurrency exchange FTX proposed independent legal action concerning the acquisition of stock-clearing platform, Embed. A settlement with ex-CEO Sam Bankman-Fried was revealed, addressing claims linked to Embed litigation. Bankman-Fried will be required to reimburse the value of future equity agreements and forfeit all associated assets. Despite these proceedings, many aspects of FTX's bankruptcy case remain unresolved.
Defaulted cryptocurrency market FTX's creditors have put forth independent legal action in the bankruptcy case surrounding the acquisition of stock-clearing platform Embed. On December 22, a filing with the U.S. Bankruptcy Court District in Delaware, FTX’s creditors revealed a forthcoming settlement with ex-CEO, Sam “SBF” Bankman-Fried, pertaining solely to accusations made against him linked with the Embed litigation. FTX’s U.S. division bought Embed for $220 million in June 2022, performing minimal due diligence, allege attorneys for FTX’s executives. "The agreement is in the plaintiff's estates, creditors, and stakeholders' utmost interest and should be expedited," read the filing. "The terms of the agreement guarantee 100% recovery of the value invested in the (simple agreements for future equity) by Bankman-Fried for the benefit of the plaintiff’s estates. Furthermore, Bankman-Fried forfeits and assigns any assets tied to his account with Embed to the plaintiffs." FTX US extended two simple future equity agreements to Bankman-Fried in 2022, stipulating the ex-CEO of FTX owes $160 million for a scheduled amount of shares in the digital currency hedge-fund. The proposed settlement suggests the total value regarding FTX US entitlement should be reimbursed by SBF. Presently, the bankruptcy case, as it relates to Embed and Bankman-Fried, is predominantly focused on resolving a select few troubling elements, not the complete assortment of exchange assets reflecting ongoing creditor claims. Following Bankman-Fried's resignation and subsequent conviction of seven felonies in the US, FTX declared bankruptcy in November 2022. On December 19, FTX's debtors announced their intention to pool their resources with FTX Digital Markets, their Bahamian counterpart, as a necessary step in redistributing funds to clients. That declaration is the most recent maneuver by the debtors to manipulate company assets and refund creditors as stipulated in their reorganization proposals.
Published At
12/25/2023 6:45:10 PM
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