FTX files lawsuit against Binance and former CEO; seeks $1.8 billion in recovery

FTX has filed a lawsuit against Binance and its former Chief Executive Officer Changpeng Zhao. The bankrupt cryptocurrency exchange firm aims to recover nearly $1.8 billion, claiming it was fraudulently transferred by Sam Bankman-Fried – former CEO of FTX to Binance and its executives.

The lawsuit concerns Binance’s sale of its stake in FTX, originally acquired in 2019 and later sold back to FTX in a deal negotiated in July 2021.It claims that FTX's sister trading house Alameda Research division directly funded the share repurchase using tokens which had a then fair market value of $1.76 billion.
Alameda, the lawsuit alleges, was insolvent at the time of buying the shares and could not therefore afford to fund the transaction and it should not have been allowed to proceed. Alameda Research “may have been insolvent from inception and certainly were balance-sheet insolvent by early 2021,” the estate said in the filing. As a result, the share repurchase deal was made fraudulently, the lawsuit alleges.
“By this lawsuit, the Plaintiffs seek to recover, for the benefit of FTX’s creditors, at least $1.76 billion that was fraudulently transferred to Binance and its executives at the FTX creditors’ expense, as well as compensatory and punitive damages to be determined at trial,” the administrators for the FTX estate said.

FTX also accuses CEO Changpeng Zhao of posting a series of “false, misleading, and fraudulent tweets” shortly before FTX’s collapse, the content of which was “maliciously calculated to destroy his rival.”
What Binance says
In a statement, a Binance spokesperson said “The claims are meritless, and we will vigorously defend ourselves”.