May 18, 2023 - Economy

FTX seeks to claw back money from $250M Embed acquisition

Illustration: Sarah Grillo/Axios

FTX and sister trading unit Alameda Research are suing ex-CEO Sam Bankman-Fried and two other former execs over the acquisition of stock clearing company Embed last year.

Why it matters: This could be the first of many suits relating to acquisitions and investments that Bankman-Fried made.

Of note: The litigants are also seeking to claw back the money from Embed's former shareholders.

Details: The lawsuits allege that Bankman-Fried and other execs at FTX and Alameda Research overpaid to acquire Embed for $250 million in September 2022.

  • FTX and Alameda also allege the executives knew Alameda was insolvent and used FTX customer funds to finance the deal.

Between the lines: Embed's former shareholders (including its founder and CEO Michael Giles) are not accused of wrongdoing.

  • Still, Giles personally got $157 million from the acquisition.

The intrigue: The lawsuits also note that the highest bid received for Embed as part of an ongoing auction has been for just $1 million — from Giles himself — largely because its software didn't perform as was original claimed, rendering it now essentially worthless.

What we're watching: Whether the money gets clawed back.

Go deeper: Read the lawsuits against the ex-FTX execs and ex-Embed shareholders.

Go deeper