FTX sues Binance, seeks $1.8 billion over alleged fraud
FTX administrators are pushing to recover $1.76 billion from Binance in a lawsuit over a controversial 2021 share buyout funded by allegedly insolvent Alameda Research.
Collapsed cryptocurrency company FTX has filed a lawsuit against Binance and its former CEO Changpeng Zhao, alleging that $1.8 billion was fraudulently transferred to Binance and its executives. The case centres on a 2021 transaction in which Binance sold its stake in FTX, which it initially acquired in 2019, back to FTX for $1.76 billion. The funds for the buyout reportedly came from FTX’s Alameda Research division, which was insolvent at the time, according to the lawsuit.
FTX’s administrators claim that Alameda’s use of tokens to finance the share repurchase was improper, as the division did not have the resources to cover the transaction. The lawsuit, filed in Delaware, seeks to recover the $1.76 billion for FTX‘s creditors and demands compensatory and punitive damages. Binance has dismissed the lawsuit as ‘meritless’, pledging to defend itself vigorously. Changpeng Zhao, also known as ‘CZ’, has not yet commented.
The legal battle adds to ongoing tensions between the two former crypto giants. FTX, once a dominant player in the cryptocurrency industry, collapsed in late 2022 after Binance withdrew a rescue offer. FTX’s founder, Sam Bankman-Fried, was sentenced to 25 years in prison earlier this year for embezzling $8 billion. Meanwhile, Zhao was given a four-month sentence for breaching US anti-money laundering laws.
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