In a compelling turn of events, the debtors of the now-defunct crypto exchange FTX have come forward with a proposal in which they have suggested pursuing separate legal actions regarding the acquisition of the stock-clearing platform Embed within the context of the bankruptcy proceedings.
In a filing made on December 22 in the United States Bankruptcy Court for the District of Delaware, the debtors of FTX disclosed that they had proposed a settlement with the former CEO, Sam Bankman-Fried, commonly known as SBF.
The settlement addresses explicitly the claims made against him in the Embed Proceeding. Notably, FTX had acquired Embed for $220 million through its U.S. subsidiary in June 2022, despite claims by lawyers representing FTX’s leadership that minimal due diligence was conducted before the acquisition. Embed officially closed its doors and ceased operations on September 30, 2023.
According to the filing, the Plaintiffs believe entering into the Agreement is in the best interests of their estates, creditors, and stakeholders.
They advocate for the swift execution of the Agreement, emphasizing that its terms will enable the recovery of 100% of the value granted to Bankman-Fried through simple agreements for future equity (SAFEs).
As part of the Agreement, Bankman-Fried also relinquishes the right to and transfers all assets held in accounts under his name at Embed to the Plaintiffs.
As per the filing on December 22, FTX US issued two simple agreements for future equity (SAFEs) to its former CEO, SBF, in 2022.
These agreements required SBF to pay $160 million to obtain shares in the cryptocurrency hedge fund. The proposed resolution aims to ensure that any entitlement of SBF to the entire value of FTX US is returned.
It’s important to note that the suggested Agreement focuses specifically on specific aspects of the bankruptcy case related to Embed and SBF rather than addressing all the assets involved in handling creditor claims.
FTX initiated bankruptcy proceedings in November 2022 after the resignation of Bankman-Fried, who has since faced seven felony charges in the United States.
On December 19, FTX debtors announced plans to consolidate assets with FTX Digital Markets, the company’s Bahamian arm, as part of an ongoing effort to distribute funds to customers.
The announcement represents the latest initiative by debtors to manage company assets and meet obligations to creditors according to proposed organizational plans.
It’s important to emphasize that the outlined plans still need approval. A notable aspect of these plans raises concern as it specifies that debtors will settle claims based on asset prices as of November 11, 2022, rather than the current exchange rates.
This implies that individuals expecting reimbursement for lost Bitcoins, for instance, would receive compensation based on the value of $17,000, the price of Bitcoin when FTX filed for Chapter 11 bankruptcy, rather than the current rate of $43,440 as of the time of writing this article.
