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- 1 FTX seeks to claw back $240 million from its Embed acquisitions
- 2 FTX paid $490,000 every day to Giles until the deal was closed
- 3 Lawsuits have been filed to recover $240 million from Giles and Embed executives in an attempt to repay the creditors
Amidst the storm that FTX is in, it is searching for ways to take money from wherever it feels fit. FTX’s leadership is currently looking to claim back more than $240 million dollars from executives. Reportedly during FTX’s acquisition of Embed, a stock-clearing platform in September, the executives benefited. FTX is looking to claw back that money.
The FTX and Embed Issue
A news media house reported that the Embed acquisition by FTX has led to some lawsuits. The media house reported on May 17, former FTX CEO Sam Bankman-Fried and other top executives of FTX received a lawsuit. Although FTX’s new leadership alleges that the acquisition took place with due diligence.
A recent lawsuit was also launched against Embed CEO, Michael Giles and its shareholders. FTX accused the company of paying a “widely inflated” price of $220 million for the stock-trading platform.
Once the filing of the company was done, Laurence Beal, who is Embed’s chief technology officer conveyed that he was stunned. Beal was stunned by the fact that FTX paid such a huge amount for the company after such a short meeting with Giles. Beal took to his Twitter and described FTX’s due diligence process with a cowboy emoji.
FTX’s $240 million dollars claim
As a part of FTX’s retention, a sum of $70 million was paid to the employees of Embed as a retention bonus. Out of the $70 million, $55 million went to CEO Giles, who himself was confused about justifying this amount to his employees.
Not only that but Giles had much more money coming his way. Between the dates of June 10, 2022 (the day the acquisition agreement was signed) and September 30, 2022 (closing of the acquisition) Giles was paid an amount of $490,000 dollars every day for seven days a week.
Additionally to that, a whopping $103 million was paid to Giles when the deal closed as Giles was the largest standing shareholder of Embed.
The amount that Giles received during the retention stands in contrast with the $12,500 per month salary that he received as the CEO of Embed.
The allegation is that Giles received his retention bonus in full when the deal was closed. Although other employees were also awarded the retention fees, they were obligated to work there for two years to get their share of the bonus.
Result of the above-mentioned disproportionate pay and advantages to Giles, FTX is now seeking $236.8 million dollars. The company is seeking this amount from Gile and other top executives. FTX is also claiming an additional $6.9 million from Embed’s small shareholders.
FTX insiders have been accused by lawyers of perpetrating fraud. At a time when there was a lack of control and recordkeeping in the firm, insiders took advantage of this and used the mislocated funds to finalize the deal with Embed. This was done even after the insiders were very fully aware of FTX’s liquidity issues.
FTX after its major collapse last year filed for Chapter 11 bankruptcy on Nov 11, 2022. After the new leadership has been formed headed by John Ray III, who’s a bankruptcy lawyer the main focus has been on seeking claims and repaying the creditors.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.
