In the bankruptcy action pertaining to the acquisition of stock-clearing platform Embed, the debtors of the collapsed cryptocurrency exchange FTX have requested independent litigation.
The FTX debtors announced in a filing on December 22 that they had negotiated a proposed settlement with former CEO Sam “SBF” Bankman-Fried, “solely with respect to the claims asserted against him in the Embed Proceeding.” Despite having “performed almost no due diligence,” the cryptocurrency exchange purchased Embed for $220 million through its U.S. affiliate in June 2022, according to attorneys for FTX’s top executives.
The filing stated that it is in the best interests of the plaintiffs’ estates, creditors, and stakeholders for them to enter into the agreement, and that it should be finalised as soon as possible. “The terms of the Agreement shall recover for the estates of the Plaintiffs all value bestowed upon Bankman-Fried by the [simple agreements for future equity].” Additionally, all assets held in Bankman-Fried’s name in Embed accounts are assigned to Plaintiffs, and he renounces all rights to them.
The Dec. 22 filing states that in 2022, FTX US granted SBF two basic agreements for future equity, which stipulated that the former CEO of FTX would have to pay $160 million to acquire a number of shares in the cryptocurrency hedge fund. The resolution suggested returning to SBF the full amount of FTX US value to which it might be entitled.
The proposed agreement would not settle all of the assets the exchange is handling in relation to creditor claims; rather, it would simply address specific portions of the bankruptcy case involving Embed and SBF. After Bankman-Fried resigned, FTX filed for bankruptcy in November 2022. Since then, Fried has been found guilty of seven felonies in the United States.
On December 19, FTX debtors announced their intention to combine assets with FTX Digital Markets, the company’s Bahamian division, in an attempt to disburse money to clients. The disclosure represented the debtors’ most recent attempt to manage business assets and pay back creditors in accordance with suggested organisation plans.