Debtors associated with the defunct cryptocurrency exchange FTX have taken legal action through separate lawsuits in connection with the exchange's bankruptcy case, particularly concerning the acquisition of the stock clearing platform Embed.
In a filing dated December 22 submitted to the U.S. Bankruptcy Court in Delaware, FTX debtors detailed a proposed settlement agreement with former CEO Sam "SBF" Bankman-Fried, specifically pertaining to claims related to Embed. The filing revealed that FTX acquired Embed for $220 million in June 2022 through its U.S. subsidiary, a move characterized by the debtors as having occurred with minimal due diligence.
The document emphasized the urgency of finalizing the agreement, stating that it serves the best interests of the plaintiffs’ estate, creditors, and stakeholders. Per the terms outlined in the agreement, Bankman-Fried is set to relinquish 100% of the value conferred by the Equity Simple Agreement to the plaintiffs’ estate, while also forfeiting all rights to assets held in Embed's accounts, transferring them to the plaintiffs.
FTX US purportedly issued two simple future equity agreements to SBF in 2022, requiring payment of $160 million for the right to acquire a substantial number of shares in the crypto hedge fund. The resolution aims to restore all value belonging to FTX US, which may be attributable to Bankman-Fried.
It's important to note that the proposed settlement addresses specific elements within the bankruptcy cases associated with Embed and SBF, rather than the entirety of assets managed by the exchanges concerning creditor claims. FTX filed for bankruptcy in November 2022 following Bankman-Fried's resignation, subsequent to his conviction on seven felonies in the United States.
Additionally, on December 19, FTX Debtors revealed plans to merge assets with FTX Digital Markets, the company's arm based in the Bahamas. This strategic move forms part of their efforts to allocate funds to clients and settle outstanding obligations, representing the most recent step in the debtors' strategy to liquidate the company's assets and repay creditors as outlined in a proposed organizational plan.
