4. März 2024

FTX Sues Embed Insiders for $244M Clawback in Wildly Inflated Deal

• FTX is taking legal action to pursue $243.7 million from Embed’s insiders and executives, claiming they paid a “wildly inflated” price for the stock-trading platform.
• The lawsuit claims that Michael Giles, the CEO of Embed, was awarded an additional $103 million when the deal closed due to his standing as Embed’s largest shareholder.
• FTX also paid Embed employees a total of $70 million in retention bonuses, with the majority of that sum — $55 million — going to Giles.

FTX Pursues Clawback from Embed Acquisition Deal

FTX is taking legal action to pursue $243.7 million from Embed’s insiders and executives, claiming they paid a „wildly inflated“ price for the stock-trading platform. The lawsuit alleges that Michael Giles, the CEO of Embed, was awarded an additional $103 million when the deal closed due to his standing as Embed’s largest shareholder. Furthermore, FTX also paid out a total of $70 million in retention bonuses to various employees at Embed; with the majority of that sum ($55 million) going directly to Giles himself.

Embed CTO Stunned by Price Paid

The filing claims that Laurence Beal (Embeds‘ Chief Technology Officer) was stunned by how much FTX had agreed to pay for Embeds after only one short meeting with its CEO Michael Giles. In correspondence with another senior employee at Embeds‘, Beal described FTX’s due diligence process using a cowboy emoji – indicating he thought it lacked thoroughness and care.

Giles‘ Retention Bonus Agreement

As part of the purchase agreement between FTX and Embeds‘, Michael Giles was given a retention bonus payment agreement worth up to $490,000 per day between June 10th 2022 (when he signed off on the acquisition agreement) and September 30th 2022 (when it officially closed). This amount stands in stark contrast to his normal salary as CEO ($12,500 per month). Despite other employees being awarded similar agreements, only Giles received his full bonus on closing date – resulting in him receiving almost three times more than any other employee combined.

Investigation into Wildly Inflated Price

In response to these irregularities during the acquisition process, FTX’s new leadership is now looking to claw back funds from those involved – alleging they failed conduct enough due diligence before signing off on such an expensive deal; which could potentially have been far less than what was agreed upon in September 2022 if done correctly!

Conclusion

Despite having difficulty recouping any money through legal avenues due to lack of evidence available supporting their case; FTX is still adamant about pursuing this case further in order ensure those responsible are held accountable for their actions during this transaction – which could have seen them make millions more than necessary had it been handled differently!