Former FTX executives massively overpaid to acquire a Swiss firm where a close associate of Sam Bankman-Fried worked, the failed crypto platform alleged in a lawsuit that seeks to recover at least $323.5 million from beneficiaries of a deal that expanded the platform in Europe.
(Bloomberg) — Former FTX executives massively overpaid to acquire a Swiss firm where a close associate of Sam Bankman-Fried worked, the failed crypto platform alleged in a lawsuit that seeks to recover at least $323.5 million from beneficiaries of a deal that expanded the platform in Europe.
FTX Trading Ltd. said in a lawsuit filed Wednesday in Delaware bankruptcy court that Bankman-Fried and other executives conducted no due diligence, nor engaged in price negotiations before offering to purchase financial services firm Digital Assets DA AG, which was later renamed FTX Europe. The complaint seeks to recover funds FTX paid to a group of DAAG shareholders including an alleged close associate of Bankman-Fried.
FTX said in the lawsuit that the firm and its affiliate Alameda Ventures Ltd. paid an “unjustifiably high purchase price” for DAAG, dolling out $376 million to its principals in exchange for little more than a business plan and European securities license that cost €2 million to acquire.
A spokesman for Bankman-Fried declined to comment.
The lawsuit expands the scope of litigation FTX’s new chief executive officer is pursuing as part of a broad effort to recover funds for the platform’s customers and other creditors. Chapter 11 gives companies the ability to claw back money paid before bankruptcy if a judge determines the business got far less value in return for what was paid.
FTX filed bankruptcy in November, freezing funds on the platform and leaving customers uncertain about how much they will be repaid. Bankman-Fried has pleaded not guilty to fraud charges.
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