FTX Lawyers Pursue $323.5M Recovery, Alleging Fraud in FTX Europe Acquisition.

In a significant development, legal representatives of cryptocurrency exchange FTX have filed a court request seeking over $323.5 million in recovery from FTX Europe’s leadership. The lawyers claim fraudulent intent in the acquisition of DAAG, a Swiss company, by Futures Exchange, leading to potential hindrance or defrauding of creditors.

FTX Faces Legal Challenges Over Payments to FTX Europe’s Leaders

FTX has encountered legal obstacles as lawyers strive to prevent payments to Futures Exchange Europe’s top executives, citing the perceived lack of value in FTX Europe as an asset.

According to a court filing on July 12, lawyers representing Futures Exchange have approached a U.S. bankruptcy court in Delaware, seeking recovery of more than $323.5 million. The complaint, filed under avoidance and recovery of transfers, alleges that Futures Exchange’s acquisition of DAAG was strategically orchestrated to impede or defraud creditors.

The plaintiffs argue that Futures Exchange executives pursued the acquisition of DAAG, through Alameda Research for $376 million, with the aim of gaining access to European regulators and establishing a foothold in the region. However, it is claimed that DAAG had minimal business operations and lacked significant intellectual property, aside from a business plan. Despite this, DAAG facilitated the Futures Exchange in obtaining an operating license in Cyprus by acquiring a local company for 2 million euros ($2.2 million). Furthermore, the Futures Exchange continued to make substantial payments to DAAG, now known as Futures Exchange Europe, for IT and consulting services.

The plaintiffs seek to recover a substantial portion of the funds from the defendants, including co-founders and former top executives of Futures Exchange Europe. They argue that each transfer made during the DAAG deal was executed with the intention to hinder, delay, or defraud current or future creditors. If successful, the plaintiffs may be able to recover the full amount of these transfers, along with interest, costs, and fees, for the benefit of the FTX bankruptcy estate.

The requested sum by the plaintiffs is no less than $323,500,000, and they also reserve the right to pursue any additional avoidable transfers discovered during the course of their investigation.

Lawyers representing Futures Exchange Trading Ltd. and Maclaurin Investments Ltd., both entities owned by Alameda Research, have petitioned the court to demand the return of funds transferred to Patrick Gruhn, Robin Matzke, Brandon Williams, and Lorem Ipsum UG, the leaders of Futures Exchange Europe.

The lawyers have further requested the court to cease any remaining payments to FTX Europe’s leadership. The initial deal amounted to over $376 million, with $52.5 million still outstanding.

“FTX Insiders pursued the DAAG acquisition because they believed DAAG’s founders could provide access to European regulators that would allow FTX to obtain the necessary licenses for activities in the European Economic Area, and because they wanted to benefit Williams and Matzke, who had preexisting relationships with Bankman-Fried,”

The legal team contends that Futures Exchange Europe lacks value as an asset and is unlikely to be sold. In April, a Swiss court granted Futures Exchange permission to explore the potential sale of Futures Exchange Europe. Since March, Futures Exchange Europe has been in the process of facilitating customer fund withdrawals.

The FTT token, associated with the FTX exchange, is currently trading at $1.60, representing a 7% increase for holders in the past week. Successful recovery of FTX user funds has the potential to positively impact the token’s long-term price trajectory.


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