- He and two other members of top management are accused of negligence and fraud
- Allegedly the Embed platform was grossly overvalued at purchase
- its former CEO offered only $1 million for a buyback
- FTX insists the deal be voided
In June 2022, FTX US struck a deal to buy the Embed platform for $220 million.
The parent company’s new management believes the agreement was a mistake because the firm did not bother to do due diligence on the acquisition.
In January, after FTX went bankrupt, the firm filed a petition to sell some of its portfolio organizations. Embed was one of them.
But the main bidder for the platform offered only $1 million for it. After a thorough review, it turned out that the site was grossly overvalued and virtually worthless.
“Bidders found that FTX Group and FTX US did not bother to conduct a due diligence on the organization before buying it.
Embed’s lauded software platform turned out to be a “flop,” the exchange said in a statement.
From the $220 million Embed CEO Michael Giles previously offered, he received more than half.
He is the only one who did not withdraw the bid after the platform review, but set the maximum bid amount at $1 million.
Bankman-Fried, Zixiao Wang and Nishad Singh have not only been accused of negligence.
According to FTX lawyers, they used forgery to hide Alameda Research’s involvement and client funds in the agreement.
The lawsuit seeks to have the new exchange management label the transaction as “chargeback transactions.”
In that case, the company has a chance to get its money back and cancel the agreement.