U.S. lawyers representing FTX Trading Ltd. and Maclaurin Investments Ltd. are seeking the recovery of $323.5 million from FTX’s European leadership in a significant court battle in a Delaware bankruptcy court. The sum in dispute relates to alleged excessive earn-out payments and fund transfers made during the acquisition of a Swiss company named DAAG, which was later rebranded as FTX Europe.
Controversial DAAG acquisition
DAAG was a small Swiss firm with limited business operations and virtually no intellectual property. Despite this, the now-bankrupt FTX, under the leadership of Sam Bankman-Fried, bought it for approximately $323.5 million. The rationale for this acquisition was access to European regulators and a perceived opportunity for license acquisition within the European Economic Area (EEA).
But the plaintiffs assert that the leaders of FTX Europe, namely Patrick Gruhn, Robin Matzke, Brandon Williams, and Lorem Ipsum UG, received nearly $100 million in excessive earn-out payments tied to the acquisition of K-DNA. K-DNA was a licensed operator in the EEA, purchased for only €2 million and later incorporated into FTX Europe.
Lingering payment obligations and insolvency concerns
As per the filing, there is a lingering obligation of $52.5 million due to FTX Europe’s leadership, part of an initial deal exceeding $376 million. Lawyers representing FTX Trading Ltd. and Maclaurin Investments Ltd. are urging the court to suspend any remaining payments due to the alleged lack of value in FTX Europe as an asset.
In an effort to mitigate the damage from the collapse of the exchange, FTX Europe began the process of allowing customers to withdraw funds in March. This was followed by an approved request by a Swiss court to explore the sale of FTX Europe in April.
The Delaware lawsuit is the latest development in the fallout from the bankruptcy of FTX, filed in November 2022. The allegations raised in the current case follow a series of other charges against the exchange and its affiliates, with former CEO Sam Bankman-Fried awaiting two criminal trials. Additionally, former Alameda Research CEO Caroline Ellison and FTX co-founder Gary Wang pleaded guilty to fraud charges in December 2022.
