FTX filed a lawsuit against Binance and its former chief executive Changpeng Zhao, seeking to claw back almost $1.8 billion (€1.7 billion) it alleges was fraudulently transferred by Sam Bankman-Fried.
Binance, Zhao and other executives received the funds as part of a July 2021 share repurchase deal with Bankman-Fried, the FTX co-founder who is now in prison.
In that transaction, they sold stakes of about 20 per cent in FTX’s international unit and 18.4 per cent in its US-based entity, according to a legal filing from the FTX estate on Sunday.
Bankman-Fried paid for the stock repurchase using a mix of FTX’s exchange token FTT and Binance-branded coins BNB and BUSD valued at $1.76 billion at the time, according to the filing.
FTX and its sister trading house 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, it alleged.
FTX also accused 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.”
A November 6, 2022 tweet by Zhao stated that Binance intended to sell its FTT tokens, worth some $529 million at the time, causing withdrawals from the exchange to skyrocket.
“The claims are meritless, and we will vigorously defend ourselves,” a Binance spokesperson said in a statement on Monday. A representative for Zhao didn’t immediately reply to an emailed request for comment
The lawsuit is one of many filed by FTX against its former investors, affiliates and clients in the bankruptcy court of Delaware. Other defendants include former White House communications officer Anthony Scaramucci, digital-asset exchange Crypto.com and political groups such as the Mark Zuckerberg-founded FWD.US, according to court documents.
Credit: [Bloomberg]
