Bankrupt cryptocurrency exchange FTX is suing former chief executive Sam Bankman-Fried and others over the acquisition of stock trading platform Embed, looking to claw back hundreds of millions in funds to repay creditors and customers, WSJ Pro Bankruptcy reported. The lawsuit alleges former FTX executives did little due diligence before an “astronomical” $240 million was paid for a business now valued at no more than $1 million, the highest bid received in bankruptcy for the asset, according to the lawsuit filed Wednesday in the U.S. Bankruptcy Court in Wilmington, Del. “The result of the bidding process leaves no doubt” that the more than $240 million paid to acquire Embed “was wildly inflated,” the new FTX management team said in the lawsuit. The bidders in bankruptcy “figured out what FTX insiders didn’t bother to assess before the Embed acquisition, namely, that Embed’s vaunted software platform was essentially worthless.” In pursuing the Embed acquisition, “the FTX insiders prioritized speed above all else,” the suit said. At the time of the acquisition, Embed had a “minuscule” customer base and “serious bugs plaguing its software platform,” according to the lawsuit. The new FTX management also filed lawsuits against former Embed employees and shareholders.
