Lawyers for FTX have filed a lawsuit against Sam Bankman-Fried, alleging that he fraudulently overpaid for a fintech company in order to use its assets to prop up his struggling cryptocurrency exchange.
The lawsuit, which was filed in the U.S. Bankruptcy Court for the District of Delaware, alleges that Bankman-Fried, the CEO of FTX, and his investment firm, Alameda Research, knew that the fintech company, Embed, was “worthless” when they agreed to acquire it for $250 million in September 2022.
The lawsuit claims that Bankman-Fried and Alameda Research used the acquisition of Embed to “illegally transfer” assets from FTX to Alameda Research, in order to prop up Alameda Research’s struggling cryptocurrency hedge fund.
The lawsuit seeks to recover the $250 million that FTX paid for Embed, as well as damages for fraud and breach of contract.
Bankman-Fried has not yet responded to the lawsuit.