The debtors of the now-defunct cryptocurrency exchange FTX have unveiled a new legal strategy in their ongoing bankruptcy case, centering on the acquisition of the stock-clearing platform Embed.
In a recent filing dated December 22nd, submitted to the United States Bankruptcy Court for the District of Delaware, these debtors disclosed that they have reached a tentative settlement agreement with the former CEO of FTX, Sam “SBF” Bankman-Fried, specifically regarding claims related to the Embed acquisition.
The controversial acquisition of Embed for $220 million, executed through FTX’s U.S. division in June 2022, raised eyebrows due to allegations that FTX conducted minimal due diligence before proceeding.
Legal representatives for FTX’s leadership have expressed concerns over the transaction.
However, the debtors have stated that the proposed settlement with Bankman-Fried is in the best interests of their estates, creditors, and stakeholders.
The agreement aims to recover 100% of the value granted to Bankman-Fried through simple agreements for future equity (SAFEs) issued by FTX US in 2022.
Under these agreements, Bankman-Fried was obligated to pay $160 million in exchange for future shares in a cryptocurrency hedge fund.
The proposed resolution seeks to ensure that all the value potentially owed to Bankman-Fried by FTX US is returned to the debtors.
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It’s important to note that this proposed agreement addresses only specific aspects of the bankruptcy case related to Embed and Bankman-Fried.
It does not encompass all the assets and complexities involved in the broader bankruptcy proceedings initiated by FTX in November 2022. Bankman-Fried’s subsequent conviction on seven felony charges in the United States has added complexity to the situation.
In a separate development on December 19th, FTX debtors announced their intention to consolidate assets with FTX Digital Markets, the Bahamian arm of the firm.
This move is part of their ongoing efforts to organize and distribute funds to customers and creditors as outlined in their proposed organizational plans.
As the bankruptcy case unfolds, it remains a matter of considerable interest in the cryptocurrency industry, with numerous stakeholders closely monitoring the outcome and its implications for the broader ecosystem.
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