Collapsed cryptocurrency exchange FTX is going after the executives of its European subsidiary in a bid to recover $323 million. in lawsuit Filed in US Bankruptcy Court in Delaware, the exchange claimed it overpaid to acquire its European subsidiary while accusing Sam Bankman-Fried and other firm Insiders of mishandling funds from creditors and customers.
Lawyers representing FTX Trading Ltd and Maclaurin Investments Ltd have accused Sam Bankman-Fried and his partners of buying Digital Assets AG (DAAG) – a Swiss company that later became the European subsidiary of FTX, for $323 million between 2020 and 2021 despite knowing that DAAG were limited. Business and no intellectual property goes beyond the Business Plan.
Now, the group is requesting that the funds transferred be returned to Patrick Grune, Robin Matzke, Brandon Williams and Lorem Ipsum UG, founders of Digital Assets AG and current leadership of FTX Europe.
Lawyers asserted that FTX Europe leadership was given exorbitant dividend payments because it was assumed that they could provide access to European authorities, which would enable the exchange to secure the required permits for activities within the European Economic Area.
However, only K-DNA Financial Services Ltd, a company already authorized to do business in the EEA, was bought into FTX Europe for just €2 million.
In April, a Swiss court approved a request by a cryptocurrency exchange to sell its European subsidiary. However, it appears that according to court filings, existing stakeholders have discovered that FTX Europe lacks value as an asset and cannot be sold.
FTT token surges amid bankruptcy proceedings | Source: FTTUSD on Tradingview.com
FTX is trying to recover
since bankruptcy application In November 2022, the cryptocurrency exchange filed a number of lawsuits hoping to recoup the money that Bankman-Fried and other exchange insiders had spent in order to pay off some of its investors and customers.
Attorneys filed a similar lawsuit in May against Embed founder Michael Giles and other shareholders. In a similar fashion, the lawyers have asked the court to return more than $240 million it paid to acquire Embed, the stock trading platform. According to the filings, the former FTX insider did not conduct any investigation before purchasing the platform, which it described as worthless and full of errors.
FTX was once seen as a pioneer in promoting mainstream adoption of cryptocurrencies, but the future of its operations still hangs in the balance. There are already rumors that it is working on relaunching the cryptocurrency exchange with a rebrand.
According to the Wall Street Journal, the exchange is already in preliminary discussions with investors. However, the actions of the FTX leadership have shaken the entire crypto community and damaged the relationships that have been built over the years.
Featured image from BBC, chart from Tradingview.com