FTX Debtors Propose Litigation Settlement Over $220 Million Embed Acquisition
The ongoing saga of the FTX bankruptcy has taken a new turn with the latest developments involving the acquisition of the stock-clearing platform Embed. FTX debtors, grappling with the fallout of the crypto exchange's collapse, have proposed a separate litigation settlement in the bankruptcy case, focusing specifically on this controversial acquisition.
At the heart of this dispute is the acquisition of Embed, a deal completed for $220 million in June 2022 by FTX’s U.S. arm. Notably, this acquisition was executed with minimal due diligence, as noted by FTX's legal representatives. In a significant move, FTX debtors have reached a proposed settlement with former CEO Sam “SBF” Bankman-Fried. This settlement pertains exclusively to the claims against him in the Embed case, aiming to recover the full value conferred by the simple agreements for future equity (SAFEs) upon Bankman-Fried and ensuring he relinquishes all assets held in his name at Embed.
The details of the settlement include two SAFEs issued by FTX US to Bankman-Fried in 2022. These agreements necessitated Bankman-Fried to pay $160 million for rights to a number of shares in the crypto hedge fund. The proposed resolution ensures the return of all value from FTX US to which Bankman-Fried may be entitled.
It's crucial to understand that this proposed agreement is limited in scope, addressing only specific aspects of the bankruptcy case related to Embed and Bankman-Fried. This agreement does not encompass all assets involved in the FTX bankruptcy proceedings. Following its filing for bankruptcy in November 2022, after Bankman-Fried's resignation and subsequent conviction of felony charges, FTX has been actively managing creditor claims and consolidating
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