FTX’s Bankruptcy: Settlement with Former CEO and Asset Transfer”

In the ongoing bankruptcy proceeding concerning the acquisition of the stock-clearing platform Embed, the debtors of the collapsed cryptocurrency exchange FTX have submitted additional lawsuit actions.

On December 22, the debtors of FTX submitted a statement to the United States Bankruptcy Court for the District of Delaware, announcing that they had negotiated a proposed settlement with former CEO Sam “SBF” Bankman-Fried, specifically addressing the claims asserted against him in the Embed Proceeding.

Lawyers for FTX’s leadership have stated that the cryptocurrency exchange acquired Embed for a total of $220 million through its United States branch in June of 2022. This was even though the exchange had “performed almost no due diligence.”

According to the lawsuit, “the entry into the agreement by the plaintiffs is in the best interests of their estates, creditors, and stakeholders, and the agreement ought to be consummated as quickly as possible.” Following the terms of the agreement, the plaintiffs’ estates will be entitled to recover one hundred percent of the value that was bestowed upon Bankman-Fried by the basic arrangements for future equity.

Source: Kroll

Furthermore, Bankman-Fried relinquishes his claim to all assets held in his name at Embed and transfers them to the plaintiffs. On December 22, FTX US issued two simple agreements for future equity to SBF in 2022, as stated in the filing.

These agreements required the former CEO of FTX to pay a sum of 160 million dollars in exchange for the right to a certain number of shares in the cryptocurrency hedge fund. The resolution proposed giving SBF the total amount of the value of FTX US to which it might be entitled.

Rather than resolving all of the assets that the exchange is dealing with as it deals with creditor claims, the proposed accord would simply handle those portions of the bankruptcy case that pertain to Embed and SBF.

After Bankman-Fried resigned from his position at FTX in November 2022, the company immediately filed for bankruptcy. Bankman-Fried has been convicted of seven felony offenses in the United States.

The debtors of FTX said on December 19 that they intended to combine their assets with those of FTX Digital Markets, which is the Bahamian subsidiary of the company, to facilitate the distribution of monies to consumers.

The announcement was the most recent attempt by debtors to manage firm assets and repay creditors following stated organization plans.