FTX Pays the Price for Past Mistakes
The notorious FTX exchange has settled a lawsuit to recover $323 million spent in 2021 to acquire a European startup.
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The notorious FTX exchange has settled a lawsuit to recover $323 million spent in 2021 to acquire a European startup.
Instead of reimbursing the full amount, the exchange will sell the startup back to its previous owner for $32.7 million.
The lawsuit was brought against the founders of Digital Assets AG, which FTX acquired and rebranded as FTX Europe in 2021. In July 2023, FTX filed a lawsuit, alleging that the $323 million price, sourced from the exchange's clients' funds, was overly inflated.
According to the lawsuit, at the time of acquisition, FTX Europe had only marginally progressed beyond a business plan and had yet to commence operations.
Digital Assets AG disputed FTX's claims and filed its own lawsuit, seeking $256.6 million from the exchange. Litigating these conflicting claims would have been prohibitively expensive and time-consuming for FTX, especially since key witnesses like FTX founder Sam Bankman-Fried would be unavailable to testify.
Thus, the exchange determined that selling the European subsidiary for a fraction of the initial price would be the most viable option for creditors, as there were no willing buyers at a higher price.
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