FTX Units Sue Embed Shareholders, Seek to Retrieve $6.9M

Alameda Research and West Realm Shires, two wings of the bankrupt FTX empire, are seeking to claw back $6.9 million from Embed Financial shareholders, a broker-dealer that Sam Bankman-Fried acquired using FTX funds.

According to a Wednesday court filing in Delaware, Alameda alleges that Bankman-Fried and other FTX insiders paid Embed using misappropriated funds in late September 2022, only weeks before the crypto exchange filed for bankruptcy.

Alameda and West Realm Shires (better known as FTX US) are seeking to reclaim money paid to Embed shareholders under bankruptcy laws, whereby courts to undo “fraudulent transfers,” transfers of a company’s assets in order to prevent them being repaid to creditors.

The shareholders targeted by the action include Y Combinator and Bain Capital Ventures.

Edited by Parikshit Mishra.

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