Fintech investor Michael Giles, who has history with Block’s Jack Dorsey and FTX’s Sam Bankman-Fried, takes 20pc in stock challenger NSX

Mr Giles ended his tenure with Square at the end of 2019. His investment in NSX made through FinTech HQ is linked to his separate startup investment outfit, the Harland Group. Sources at Block Inc said the investment in NSX was not related to their business.

Giles did not respond to requests for comment.

FTX link

After leaving Square in 2019, Mr. Giles established Embed Financial Technologies Inc, a business focused on custody and clearing services for stocks and options. In 2021, it raised $20 million from investors such as Bain Capital Ventures, Propel Venture Partners and Acrew Capital.

Last June, cryptocurrency exchange group FTX bought Embed Financial and its subsidiary Embed Clearing after Mr Bankman-Fried’s now-collapsed company announced plans to launch a share trading platform, FTX Stocks.

At the time, FTX US president Brett Harrison said the company was “thrilled to work with Michael Giles … and the Embed team to continue to build our US equity trading platform … and to provide comprehensive clearing, custody and execution services to our American customers”.

Embed Clearing is a member of the Financial Industry Regulatory Authority, the Depository Trust Company, the National Securities Clearing Corporation and NASDAQ. It is an SEC-registered broker-dealer.

In a press release announcing the agreement with FTX, Mr Giles said: “When we initially started working with the FTX US team as their clearing partner, we soon realized how similar our respective cultures were.

“Our teams have a shared vision and dedication to building from the ground up to democratize access to financial services, and Embed’s latest securities technology is the ideal free [sic] to FTX’s leading crypto solutions.”

Bankman-Fried is accused of illegally using FTX customer deposits to support his Alameda Research hedge fund, buy real estate and make millions of dollars in political contributions. He denies the charges and defends the case.

According to FTX administrator John Ray, who was named to the wreckage of the cryptocurrency giant when it collapsed last year, Embed Clearing LLC had $30 million in unrestricted cash on its books at the time of FTX’s collapse.

Embed is contained in FTX’s silo known as West Realm Shires Inc, where it is a non-debtor.

Giles’ stake compares with the current 23.1 per cent stake held by ISX Financial EU PLC, the Cyprus-based entity that was spun off from suspended (and now delisted) ASX firm iSignthis and renamed Southern Cross Payments.

ISX Financial is controlled by John Karantzis, the former founder of controversial firm iSignthis, who the Australian Securities and Investments Commission has sued and is seeking to ban from managing companies. Karantzis denies the charges and defends the case.

ASIC has charged iSignthis with false and misleading representations and Karantzis with his “engagement in the alleged breaches”, including breaches of his director duties and “his failure to take reasonable steps to ensure that the information he provided to the ASX was not false or misleading” .

Another Federal Court case, which iSignthis had brought against the ASX following the exchange’s suspension of the company over concerns about accounting irregularities and the awarding of bonuses to executives, was dumped late last year.

Meanwhile, Karantzis remains embroiled in a legal dispute with the Australian Taxation Office over an unpaid $10 million tax bill, which he also disputes.

Last month, the Australian Competition and Consumer Commission said it had refused a consumer data rights accreditation for iSignthis, which it said was “the first time the ACCC has refused to accredit a company seeking to be … accredited”.

ACCC Commissioner Peter Crone said at the time that the regulator was not satisfied with iSignthis’s data security protections (based on the company’s demonstrations), its assurance (iSignthis provided no evidence of any policies), and whether it was an appropriate entity to be accredited (based on ” a number of conditions”).