FTX Lawyers File Lawsuit Against Sam Bankman-Fried

May 20, 2023 2:33 pm Comments

In an interesting turn of events, it looks like FTX lawyers are now filing a lawsuit against Sam Bankman-Fried himself.

The lawsuit is for the $220 million acquisition of Embed where the lawyers claim that clients funds were misused in order to finance that acquisition.

This may have likely been done because SBF and other executives already knew of the incoming collapse of FTX and wanted to spend the capital as soon as possible.

The events that have gone on regarding FTX have created a negative reputation of the crypto industry and demonstrates an example where the SEC had failed to protect investors.

It also demonstrated the importance of having a private wallet to store assets off of exchanges which many investors had to learn the hard way.

Watcher.guru reports:

Moreover, the lawyers also accuse FTX management of taking advantage of the FTX Group’s lack of control. They claimed that in order to finance the purchase of Embed, the company misused client funds. Furthermore, they assert that when the deal was in its final stages, the senior management was fully aware of the company’s insolvency.

The attorneys also claimed that false records had been made to hide Alameda’s financing of the Embed transaction.

The FTX collapse is one of the most historic financial disasters in modern times. The collapse was the final blow to the crypto industry that was already limping from the collapse of Terraform Labs, Celsius, Voyager Digital, and others.

However, the incident shed light on many loopholes and problems in the crypto industry. For most retail investors, the collapse highlighted the importance of keeping their crypto in a hardware wallet, off of exchanges.

The collapse of FTX has been used an excuse by regulators to enforce a very anti-crypto agenda this year which has caused a lot of uncertainty in the markets.

More and more exchanges are now under scrutiny which makes it difficult for legitimate crypto exchanges to operate within the country.

This new lawsuit also revealed that there was a compete lack of due diligence under the leadership of SBF which led to the company making terrible deals.

It is unsure if this deals were done intentionally or not in order to misuse client funds, but it is clear that there is a lot that is going on that the public does not know about when it comes to FTX.

CryptoSlate.com concludes:

Bankrupt crypto exchange FTX sued Sam Bankman-Fried (SBF) and other former executives of the company for the $250 million acquisition of stock clearing platform Embed.

According to a May 17 court filing, SBF and other executives — Nishad Singh and Gary Wonder — knew Alameda Research was insolvent and still went ahead with the deal. Besides that, the lawsuit alleged that the deal was significantly overpriced.

FTX liquidators filed the suit in the U.S. Bankruptcy Court for the District of Delaware. Part of their claims is that SBF and his fellow executives deliberately took FTX customers’ funds to complete the acquisition on behalf of Alameda.

Meanwhile, FTX has also filed lawsuits against Embed co-founder Michael Giles and other early investors, including venture capital firm Propel Ventures Partners. This lawsuit aims to claw back funds from what FTX liquidators describe as a bad deal.

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