In the filing, FTX claims that Embed acquisition price was "wildly inflated."
FTX is trying to recover an enormous sum of $244 million that was allegedly unduly gained by insiders and executives through the overpriced acquisition of the stock-clearing platform Embed.
According to the court documents shared on May 18th, the lawsuit was filed against Embed's CEO, Michael Giles, and the company's shareholders. The lawsuit alleges that Giles and other stakeholders profited from a "wildly inflated" price of $220 million for the stock-trading platform.
Did you know?
Want to get smarter & wealthier with crypto?
Subscribe - We publish new crypto explainer videos every week!
What is Ethereum 2.0? Upgrades Easily Explained With Animations
It is believed that as a part of the deal, FTX paid $70 million in retention bonuses to Embed employees. The majority of that amount, a whopping $55 million, went to Giles.
On top of that, the lawsuit alleges that from the acquisition agreement signing date on June 10th, 2022, until the closure on September 30th, 2022, Giles received an incredible $490,000 every day.
Upon the deal's closure, Giles got another $103 million due to his position as Embed’s largest shareholder.
It is worth noting that these payments significantly contributed to Gile's regular salary of $12,500 per month as Embed's CEO.
However, now, FTX is determined to recover $236.8 million from Giles and other Embed executives and an additional $6.9 million from smaller shareholders of Embed.
On May 17th, FTX also filed a lawsuit against former FTX CEO Sam Bankman-Fried, along with a group of insiders, claiming that the Embed acquisition was carried out with insufficient diligence.
FTX filed for Chapter 11 bankruptcy protection on November 11th, 2022. Under the new leadership, the company aims to recover funds to repay customers and creditors. Moreover, the company appears to be considering relaunching its operations.
