According to the legal team trying to return FTX investor funds through court actions, the failed crypto exchange spent nearly $400 million acquiring Swiss company Digital Assets AG (DAAG), which became FTX Europe. Now the plaintiffs are looking for a refund of the money spent on the acquisition by Sam Bankman-Fried (SBF) and his associates.
The complaint for avoidance and recovery of transfers was filed to the United States Bankruptcy Court for the District of Delaware on July 12. The plaintiffs state that SBF acquired DAAG through Alameda Research for $376 million, even though the Swiss company had limited business and no intellectual property other than a business plan. FTX executives’ goal was to obtain access to European regulators by owning a local company.
In the end, as the complaint goes, DAAG helped FTX to get an operating license in Cyprus by buying out a local company for 2 million euros ($2.2 million). Moreover, FTX continued paying DAAG millions of dollars for “IT and consulting services.”
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Plaintiffs intend to recover at least part of the funds from the defendants, including the co-founders and former top executives of DAAG or FTX Europe. On a number of counts, the complaint claims each of the transfers in the DAAG deal was made “with the intent to hinder, delay, or defraud present or future creditors.” Hence, the plaintiffs seek to recover the full amount of these transfers plus interest, costs and fees to the extent available for the benefit of the FTX bankruptcy estate.
The sum, openly demanded by plaintiffs, is “no less than $323,500,000”, plus the value of any additional avoidable transfers that the plaintiffs learn during their research.
FTX and its subsidiaries have faced numerous charges since the exchange filed for bankruptcy in November 2022. Former FTX CEO Sam Bankman-Fried awaits two criminal trials on his role in the alleged crimes, while former Alameda Research CEO Caroline Ellison and FTX co-founder Gary Wang pleaded guilty to fraud charges in December 2022.
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