The bankrupt cryptocurrency exchange FTX and its debtors announced on the weekend that they have reached a settlement agreement with SBF, the co-founder of FTX, and two former executives regarding the acquisition of stock trading platform Embed. FTX is seeking to recover over $240 million that was paid for the acquisition of Embed.
According to a document submitted to the US bankruptcy court in Delaware by FTX last Saturday, as part of the settlement agreement, FTX debtors are expected to recover 100% of the value paid by FTX to acquire Embed, as well as all assets held by SBF, Singh, and Wang in Embed.
FTX debtors’ appointed lawyers stated that FTX acquired Embed for $220 million in June 2022 through its US subsidiary, FTX US, but “almost no due diligence” was conducted during the process.
To further recover the assets, the FTX restructuring team filed three lawsuits against SBF, Michael Giles, the founder of Embed, and other executives and shareholders in May 2023, seeking to recover over $240 million paid for the acquisition of Embed.
The document also indicated that FTX US issued two future equity simple agreements (Safe) to SBF in 2022, requesting the former FTX CEO to pay $160 million to purchase the right to acquire a large amount of FTX US stock. The proposed settlement agreement also suggests that SBF return all the value he may be entitled to from FTX US.
The FTX restructuring team emphasized that the proposed settlement agreement only applies to the claims related to the acquisition of Embed, and the debtors will continue to pursue other claims against former CEO SBF and senior executives. In July 2023, FTX officially filed a lawsuit against SBF and multiple former executives, demanding the return of over $1 billion in allegedly misappropriated company assets before the bankruptcy of FTX.
Furthermore, on the 19th of last week, the FTX restructuring team and its debtors also submitted legal documents announcing that they have reached a global settlement agreement with FTX’s Bahamian subsidiary, FTX Digital Markets. The agreement plans to consolidate assets from both sides to distribute compensation to customers more fairly.