FTX sues Binance and its former CEO for $1.8bn

Source: The Guardian

Mon 11 Nov 2024 12.21 EST


The collapsed cryptocurrency company FTX is suing Binance and its former CEO Changpeng Zhao, alleging that $1.8bn was “fraudulently transferred” by FTX management to Binance and its executives. The lawsuit relates to Binance’s sale of its stake in Sam Bankman-Fried’s FTX, which it acquired in 2019 but then negotiated to sell back to FTX in July 2021.

According to the lawsuit, FTX’s Alameda Research division directly funded the share repurchase using tokens which had a then fair market value of $1.76bn. 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.

“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 in a filing made on Sunday in the US state of Delaware.

A Binance spokesperson said: “The claims are meritless, and we will vigorously defend ourselves. Zhao, known as CZ, could not immediately be reached for comment.

Read more: https://www.theguardian.com/technology/2024/nov/11/ftx-sues-binance-changpeng-zhao