FTX files lawsuit against Binance and its founder Changpeng Zhao to secure $1.8 billion fund, alleging fraudulent transfer by Sam Bankman-Fried in 2021. By Rupam Roy 1 hour ago Updated 21 mins ago
Highlights
- FTX sues Binance and its founder Changpeng Zhao for $1.8 billion fraudulently transferred funds.
- The filing claims that Sam Bankman-Fried allegedly transferred FTX funds via a share repurchase agreement.
- FTX claims that Binance’s statements destabilized its financial position before the collapse.
FTX has recently filed a lawsuit against Binance and its former CEO Changpeng Zhao, demanding a return of $1.8 billion. According to FTX, the fund was fraudulently transferred by its co-founder, Sam Bankman-Fried, to the leading crypto exchange. This legal development has sparked speculations in the broader crypto market, especially as it comes as FTX works to recover funds following its collapse two years ago.
FTX Seeks $1.8B Clawback From Binance And Changpeng Zhao
According to a recent Bloomberg report, FTX alleges that the exchange and Changpeng Zhao (CZ) received the $1.8 billion as part of a share repurchase agreement in July 2021. In this transaction, Sam Bankman-Fried or SBF reportedly used a combination of the FTT, BNB, and BUSD, to repurchase approximately 20% of the international unit of FTX and 18.4% of the US-based entity.
The report notes that at the time, the total value of these assets was around $1.76 billion. In its filing, the defunct exchange contends that it and its sister firm, Alameda Research, may have been financially unstable from the beginning and were likely already insolvent by early 2021.
Based on this, the FTX estate argues that the share repurchase deal was fraudulent and should be voided to reclaim the transferred funds. Adding to the allegations, it accuses CZ of issuing misleading statements ahead of FTX’s collapse.
In November 2022, Zhao tweeted that the exchange intended to sell its FTT holdings, worth $529 million. This announcement triggered massive withdrawals from the defunct exchange, leading to a liquidity crisis. According to the filing, these statements were designed to destabilize FTX, escalating the company’s financial troubles.
FTX Expands Legal Actions
The lawsuit against Binance and Zhao is part of FTX’s broader legal efforts in Delaware’s bankruptcy court. For context, in another latest legal action, the defunct exchange targeted Chinese nationals, alleging their engagement in large-scale money laundering.
According to the report, the exchange claimed that 26 Chinese individuals and 20 unidentified individuals laundered billions through the platform. It added that the individuals have withdrawn $468 million in cash and cryptocurrency within a critical 90-day period.
Source: FTX Historian, X
Meanwhile, the case against CZ has also caught attention as the ex-CEO of the top crypto exchange made a recent comment on FTX. Besides, it also comes just after lawyers filed to dismiss the Binance SEC lawsuit, sparking discussions in the market.
