Day: November 11, 2024

FTX  sued Binance and its former CEO Changpeng Zhao, claiming a “fraudulent” share deal to recover at least $1.76 billion. 

FTX cites a 2021 transaction in which Binance, Zhao, and others sold a 20 percent stake in the platform and an 18 percent stake in its U.S. subsidiary to withdraw their investment in FTX in a filing with a Delaware court on Sunday. 

According to the FTX estate, the Alameda Research division of FTX used a mix of its and Binance’s exchange tokens, along with Binance’s dollar-pegged stablecoin, to finance the share repurchase. 

The lawsuit names the agreement reached with FTX co-founder Sam Bankman-Fried, serving a 25-year sentence for fraud connected to the collapse of his exchange, as a “constructive fraudulent transfer,” claiming that “Alameda was insolvent at the time of the share repurchase and could not afford to fund the transaction.”.  

 Binance refutes the accusations, stating, “We will vigorously defend ourselves against the claims, which are without merit.”. After the industry was rocked by FTX’s abrupt collapse, the lawsuit represents the most recent escalation of tensions between two of the biggest names in the cryptocurrency space. 

The market’s reaction peaked in November of last year when Bankman-Fried was convicted on seven counts of criminal fraud linked to the exchange’s bankruptcy and customer money theft.  

Zhao entered a guilty plea to charges of breaching U.S. law and violating the Bank Secrecy Act by failing to implement an efficient anti-money-laundering program. Zhao is also accused in the new lawsuit of “a series of false, misleading and fraudulent tweets” that, in addition to recovering money, “triggered a predictable avalanche of withdrawals at FTX,” ultimately resulting in the exchange’s demise.