Collapsed cryptocurrency exchange FTX is seeking to recover more than $240M it paid for stock-trading platform Embed, alleging that former FTX executives conducted no investigation before buying the software platform. The firm filed three lawsuits late Wednesday in U.S. Bankruptcy Court in Delaware against FTX insiders including founder Sam Bankman-Fried, Embed shareholders, and Embed executives including founder Michael Giles, Reuters reported. FTX alleges the Bankman-Fried and other FTX employees misused company funds to buy stakes in Embed as part of the transaction. The acquisition occurred six weeks before FTX filed for Chapter 11 bankruptcy in November 2022. FTX's efforts to sell Embed produced a high bid of $1M, made by Giles. The auction "leaves no doubt" that the $220M that FTX spent to purchase Embed was "wildly inflated relative to the company's fair value, which Giles well knew," Reuters reported, citing the lawsuit. The lawsuit also alleged that Embed's software, which FTX intended to use to add stock trading to its crypto platform, was "essentially worthless." As part of the deal, FTX paid Embed employees $70M in retention bonuses, most of which went to Giles. More on FTX: FTX's Sam Bankman-Fried urged U.S. judge to dismiss most criminal charges MIAX agrees to acquire FTX Trading's LedgerX unit FTX Europe approved by Swiss court to explore potential sale Over 100 parties interested in buying FTX businesses
