- He and two other members of top management are accused of negligence and fraud.
- Allegedly, the Embed platform was greatly overestimated when buying
- Its former CEO offered just $1 million for a buyback.
- FTX insists on canceling the deal
In June 2022, FTX US entered into a deal to purchase the Embed platform for $220 million. The new management of the parent company considers the agreement a mistake, because the company did not attend to the due diligence of the acquisition.
In January, after the bankruptcy of FTX, the firm filed a petition to sell some portfolio organizations. Among them was Embed.
However, the main contender for the purchase of the platform offered only $1 million for it. After a thorough check, it turned out that the platform was greatly overvalued and virtually useless.
“Bidders found that FTX Group and FTX US did not bother to conduct due diligence on the organization prior to purchasing it. The vaunted Embed software platform turned out to be “zilch” – says in a statement from representatives of the exchange.
Of the $220 million previously offered, Embed CEO Michael Giles received more than half. He is the only one who did not withdraw the application after checking the platform, but at the same time set the maximum offer amount at $1 million.
Bankman-Fried, Zixiao Wang and Nishad Singh are accused of more than negligence. According to FTX lawyers, they used a forgery to hide the involvement of Alameda Research and client funds in the agreement.
In the lawsuit, the exchange’s new management is seeking to have the deal labeled as “reversed transactions.” In this case, the company has a chance to return their money and cancel the agreement.