FTX Spent $400 Million on Acquisition of DAAG
The legal team trying to recover funds from the now-defunct crypto exchange FTX is alleging that the company spent nearly $400 million to acquire Swiss company Digital Assets AG (DAAG), which later became FTX Europe. The plaintiffs are looking to get back the money spent on the acquisition by Sam Bankman-Fried and his associates.
The complaint was filed in the United States bankruptcy court in the district of Delaware on July 12. The plaintiffs claim that SBF, through Alameda Research, acquired DAAG for $376 million, even though the Swiss company had limited business and no intellectual property “besides business plan”. The goal of FTX executives was to get access to European regulators by owning a local company.
The complaint states that DAAG indeed helped FTX to get a Cyprus operating license by buying out a local company for 2 million euro ($2.2 million). Additionally, FTX kept paying DAAG, which became FTX Europe, millions of dollars for “IT and consulting services”.
The plaintiffs are now seeking to reclaim at least some of the funds from the Defendants – the cofounders and former top executives of DAAG, now FTX Europe. The complaint alleges that the transfers in the DAAG deal were made “with the intent to hinder, delay, or defraud present or future creditors”. Thus, the Plaintiffs may be able to recover the full amount of these transfers plus interest, costs and fees for the benefit of the FTX crypto.com bankruptcy estate.
Crypto Space in Turmoil: FTX Bankruptcy and Criminal Charges
The Plaintiffs have demanded “no less than $323,500,000” in compensation, plus the value of any further avoidable transfers that they can uncover through their research.
Since FTX and its subsidiaries filed for bankruptcy in November 2022, the crypto space has been in turmoil. Sam Bankman-Fried, the former CEO of FTX, is facing two criminal trials related to the alleged crimes, while Caroline Ellison, the former Alameda Research CEO, and Gary Wang, a FTX co-founder, have both pled guilty to fraud charges in December 2022.
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