Alameda Research, under the leadership of restructuring expert John Ray, has initiated legal action in Delaware to recover significant sums of money disbursed to various individuals and entities, including the venture capital firm associated with former UK chancellor George Osborne.

The move comes in relation to a deal struck by Sam Bankman-Fried shortly before his FTX cryptocurrency empire declared bankruptcy last year.

Alleging misappropriation of FTX funds by Bankman-Fried and other insiders, Alameda seeks the reimbursement of millions of dollars from former employees of Embed Financial, who received “retention” payments as part of the acquisition deal, as well as former shareholders of the company.

The list of defendants includes prominent Silicon Valley entities that held stakes in Embed, such as Y Combinator, Bain Capital Ventures, and 9Yards, where George Osborne serves as a partner alongside his brother Theo.

By invoking bankruptcy laws that enable courts to reverse “fraudulent transfers” aimed at placing assets beyond the reach of creditors, Alameda’s legal team aims to compel the defendants, including California-based 9Yards, to repay the funds received from the Embed transaction.

As of now, 9Yards, which allegedly obtained approximately $46,000 from the deal, has not responded to requests for comment. It is important to note that none of the defendants have been accused of any wrongdoing.

According to the complaint filed, Alameda’s lawyers have outlined a complex series of transactions involving multiple accounts at the now-defunct Signature Bank. These transactions were allegedly designed to create a false impression that the $220 million used to acquire Embed originated from the personal accounts of Bankman-Fried and other FTX executives, rather than the company itself.

At the heart of the matter, as asserted by Alameda’s lawyers, is the assertion that Embed’s technology was flawed, and its net revenue amounted to a mere $25,000. This valuation significantly deviated from the amount agreed upon by Bankman-Fried’s team for the acquisition of the broker-dealer. Internal communications quoted in the court filings reveal concerns among Embed employees that FTX executives would uncover the technological shortcomings, potentially jeopardizing plans to attract 10,000 users to the newly introduced FTX Stocks product.

According to the filings, an employee stated that “[The Embed platform] is unable to accept any accounts.”

Additional employees shared their past encounters with Bankman-Fried’s team during FTX’s collaboration with Embed. One individual mentioned that the FTX affiliate involved didn’t conduct thorough due diligence, adding, “I have a feeling they operate in a rather reckless manner [cowboy emoji].”