Cryptocurrency exchange FTX is seeking to sue the founders and shareholders of Embed Financial Technologies (WRS) for fraudulently inflated valuations. FTX acquired the defunct stock trading platform last year for $220m. However, in a new lawsuit, the exchange is seeking $236.8m from Embed founders Nishad Singh, Ried Wang, and Zixiao “Gary” Wang, alongside other shareholders, and $6.9m from Embed minority shareholders. FTX claims it can reclaim the funds, citing bankruptcy law. The suits specifically name Embed President Michael Giles, and detail the extent to which FTX executives conducted little to no due diligence before acquiring the platform.
The highest bidder for Embed when FTX tried to sell it was Giles, who offered only $1m, in addition to the accusation of the fraudulent price inflation. Meanwhile, FTX filed for Chapter 11 in November, and it is now filing a lawsuit against former CEO Sam Bankman-Fried, other executives, and shareholders for allegedly using misappropriated funds to acquire Embed. FTX is alleging that the purchase amounts to a “fraudulent transfer,” and it is seeking to recoup the funds. The exchange said Bankman-Fried and other insiders used the exchange’s “lack of controls and recordkeeping to perpetrate a massive fraud.” They used company money to make private home and jet purchases, political and charitable contributions, and other investments.
Furthermore, Michael Lewis, the author famous for the books “The Big Short” and “Moneyball,” is releasing a book about Sam Bankman-Fried on 3 October. The book is titled “Going Infinite: The Rise and Fall of a New Tycoon” and offers a detailed account of Bankman-Fried’s evaporation of net worth in 2022 and his subsequent arrest and extradition to the US on charges that include wire fraud and money laundering. The book also sheds light on the author’s relationship with Bankman-Fried, which began because a friend asked him to “make sense of him” as they considered doing business together. The two then became friendly, with the author joining Bankman-Fried on hikes and spending significant time with him. The author praised Bankman-Fried for allowing him to “see everything,” and said that Bankman-Fried never sought to control anything or ask what the author was doing.
In conclusion, FTX’s lawsuit is shedding light on the extent to which the exchange conducted little due diligence when acquiring Embed Financial Technologies (WRS) and the alleged fraudulent price inflation implemented by its founders and shareholders. Additionally, Michael Lewis’s upcoming book provides insight into Sam Bankman-Fried’s sudden rise and fall as one of the world’s youngest billionaires.
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