In its ongoing effort to recover assets for creditors, the FTX bankruptcy estate has launched a new lawsuit targeting Binance. Filed on November 10, the lawsuit seeks to reclaim nearly $1.8 billion, which FTX alleges was fraudulently transferred to Binance and former CEO Changpeng “CZ” Zhao.
According to court documents, FTX asserts that Binance and its executives received around $1.76 billion in crypto through a transaction facilitated by former FTX CEO Sam Bankman-Fried (SBF). The alleged fraudulent transfer dates back to July 2021 and is part of a 2021 share purchase agreement, which FTX now claims was financially unsound due to its insolvency at the time.
FTX Claims Fraudulent $1.76B Repurchase Funded by Customer Deposits
FTX contends that SBF used a combination of FTX’s token (FTT) and Binance’s BNB and BUSD, valued at approximately $1.76 billion, to fund a share repurchase from Binance. Legal documents reveal that Alameda Research, an FTX-affiliated firm, allegedly utilized around $1 billion in customer deposits from FTX to finance the transaction. The lawsuit claims that these actions were intended to project a misleading image of financial stability, masking the fact that both FTX and Alameda were struggling with insolvency.
A spokesperson for Binance stated that the exchange intends to “vigorously defend” against these “meritless” claims, while Zhao declined to comment on the lawsuit.
Allegations of Market Manipulation by CZ Leading to FTX’s Collapse
FTX also alleges that CZ’s actions deliberately disrupted FTX’s operations. According to the lawsuit, Zhao’s November 6, 2022, tweet regarding Binance’s intention to liquidate its FTT holdings sparked widespread withdrawals from FTX. This market reaction, compounded by Binance’s withdrawal from a non-binding acquisition deal, reportedly exacerbated FTX’s financial troubles, leading to its eventual collapse.
FTX has filed over 20 lawsuits in the Delaware bankruptcy court, naming high-profile defendants, including former White House communications director Anthony Scaramucci, Crypto.com, and advocacy groups such as FWD.US, founded by Meta CEO Mark Zuckerberg.
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