Key Takeaways:
- Attestor Capital is suing Lemma Technologies for reneging on a deal to sell two FTX accounts valued at $166 million, for about $58 million, following FTX’s collapse.
- Lemma Technologies, initially not an FTX creditor, acquired the accounts from Junho Bang, its major owner, before attempting to renegotiate the sale as the value of FTX claims increased.
- The lawsuit highlights the complexities and volatilities in the cryptocurrency market, especially in bankruptcy scenarios, as evidenced by the rising value of FTX claims and the legal troubles of Junho Bang related to embezzlement charges.
In a legal confrontation emerging from the cryptocurrency world, Attestor Capital, a significant London-based investment firm holding bankruptcy claims against the former crypto exchange FTX, has initiated legal proceedings.
The lawsuit is aimed at a creditor, identified as Lemma Technologies, for reneging on an agreement to sell Attestor two FTX accounts, a deal that soured when the value of these accounts surged dramatically.
Attestor Capital, through its subsidiary Svalbard Holdings Limited, had reached an agreement in June 2023 with Lemma Technologies, a company based in Panama, to acquire two accounts originally valued at $166 million at the time of FTX’s downfall.
This agreement followed Lemma’s auction in May 2023, where Attestor emerged as the highest bidder.
Interestingly, Lemma Technologies was not an initial creditor of FTX. The company came into possession of the accounts on January 18, 2023, when its major owner, Junho Bang, a South Korean national, transferred his personal account rights to Lemma. At the time of the lawsuit, Lemma Technologies reportedly had no significant assets apart from the claims transferred by Bang.
The lawsuit details that after agreeing to sell the claims to Attestor for about $58 million, representing 35% of the accounts’ initial value, Lemma, influenced by its South Korean proprietors, experienced doubts.
Allegedly, Lemma began to express concerns over its authority to sell the claims and the potential legal repercussions for Bang from his business associates if the transfer proceeded.
As Lemma hesitated, it reportedly sought to renegotiate the sales price, which Attestor interprets as a clear case of “seller’s remorse.” At the time of the agreement, the purchase price Attestor agreed to pay was considered above market value.
However, as FTX claims’ value increased, driven by rising investor confidence in recovering their funds through the bankruptcy process and an uptick in Bitcoin’s price, the bid for FTX claims rose to 68% by the end of 2023, with the latest figures reaching as high as 92%.
Lemma Technologies has yet to publicly address Attestor’s lawsuit or present a legal defense. Attempts to contact Bang for comments have so far been unanswered.
Adding to the legal drama, Bang faces additional legal challenges related to his role with Haru Invest, a South Korean crypto yield platform. Alongside two other executives, Bang was arrested in February by Korean authorities on charges of embezzling approximately 1.1 trillion won ($828 million) from customers.
🔔 @haruinvest executives in #SouthKorea apprehended for alleged embezzlement totaling $826 million !
— Altcoin Alerts (@Altcoin_Alerts) February 6, 2024
South Korean prosecutors have arrested and detained three executives, including the two co-CEOs, of the crypto yield platform Haru Invest. The executives are accused of stealing… pic.twitter.com/Xb34vCk8G7
It remains unclear if Bang is still detained. Following operational issues attributed to one of its service providers, Haru Invest suspended withdrawals and deposits last June and has taken legal action against B&S Holdings for allegedly supplying false management reports.
This unfolding legal drama encapsulates the volatile and complex nature of cryptocurrency investments and the unpredictable outcomes of bankruptcy proceedings within the sector.
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Efe Bravo, a seasoned journalist, delivers compelling insights into the cryptocurrency and blockchain industry.
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