The legal team behind FTX investors claims DAAG was used "with the intent to hinder, delay, or defraud present or future creditors."
FTX, the bankrupt cryptocurrency exchange, is said to have splurged close to $400 million in the acquisition of Digital Assets AG (DAAG), a Swiss company that morphed into FTX Europe.
This revelation, coming from the legal representatives seeking restitution for FTX investors through legal proceedings, has sparked demands for reimbursement of the money spent on the purchase by Sam Bankman-Fried (SBF) and his team.
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On July 12th, a legal application for the avoidance and recovery of transfers was lodged with the United States Bankruptcy Court for the District of Delaware.
The plaintiffs argue that SBF, through Alameda Research, purchased DAAG at a staggering $376 million, notwithstanding the fact that the Swiss firm had a constrained business presence and no intellectual property.
The primary objective of the FTX executives, it seems, was to gain leverage with European regulators by taking over a locally established company.
Eventually, according to the complaint, DAAG played a crucial role in securing an operating license for FTX in Cyprus by procuring a local business at a cost of 2 million euros ($2.2 million).
Therefore, the plaintiffs aim to retrieve at least a fraction of the funds from the defendants, inclusive of the co-founders and ex-senior executives of either DAAG or FTX Europe.
According to the complaint, every transfer associated with the DAAG deal was conducted "with the intent to hinder, delay, or defraud present or future creditors."
Consequently, the plaintiffs are seeking to recoup the entire amount of these transfers, plus interest, costs, and fees to the maximum extent possible for the benefit of the FTX bankruptcy estate.
The explicit amount demanded by the plaintiffs stands at "no less than $323,500,000", along with the valuation of any additional avoidable transfers discovered during their investigation.
Since FTX filed for bankruptcy in November 2022, it and its subsidiaries have been beleaguered with a string of charges. Sam Bankman-Fried, the former CEO of FTX, is currently awaiting two criminal trials concerning his involvement in the alleged offenses.
The story of FTX's significant investment in its European arm continues to unfold, with new legal challenges emerging and previous ones persisting. The upcoming days will be critical in determining the crypto exchange's fate, and its impact on the broader crypto market.
