FTX is suing Binance to recover nearly $1.8 billion

The property of now-defunct crypto speech FTX has filed a suit against Binance and its erstwhile CEO Changpeng Zhao successful a bid to retrieve $1.76 billion. FTX alleges these funds were fraudulently transferred to Binance, Zhao, and different Binance executives successful July 2021 arsenic portion of a shares repurchase woody with FTX co-founder Sam Bankman-Fried.

According to the filing, the transaction saw Binance merchantability backmost the 20 percent involvement it held successful FTX’s planetary portion and 18.4 percent successful its US-based entity, which Bankman-Fried paid for utilizing a premix of FTX and Binance-branded cryptocurrencies. The FTX property alleges the stock repurchase woody was conducted unlawfully due to the fact that — pursuing monolithic fraud by Bankman-Fried and different executives — FTX and its sister institution Alameda were already insolvent astatine the time, and incapable to money the transaction.

Bankman-Fried, who is serving a 25-year situation sentence, was convicted of fraud past twelvemonth aft utilizing lawsuit funds to marque investments, governmental donations, and acquisition property.

Separately, the suit says that Zhao sent “a bid of false, misleading, and fraudulent tweets that were maliciously calculated to destruct his rival FTX.” Zhao tweeted connected November 6th, 2022 that Binance was readying to liquidate $529 cardinal worthy of FTX tokens. According to the FTX estate, this “triggered a predictable avalanche of withdrawals” that contributed to the illness of the crypto exchange.

The tally connected FTX ended up exposing a fiscal location of cards astatine the company, starring to criminal charges against Bankman-Fried and others. The Securities and Exchange Commission said that the downfall of FTX was caused by Bankman-Fried’s “own misappropriation of lawsuit funds,” and that the cognition was a fraud “from the start.”

An unnamed Binance spokesperson told Bloomberg that the claims against the institution “are meritless,” and that the institution volition “vigorously support ourselves.”

This suit is one of much than 20 that the FTX property has precocious filed to reclaim billions of dollars owed to creditors. This includes Alameda suing Waves blockchain laminitis Aleksandr Ivanov to recoup $90 cardinal that was antecedently deposited to Vires, a Waves-based liquidity platform. Last month, the FTX property besides received tribunal approval for its program to repay $16 cardinal to customers who mislaid wealth erstwhile the institution collapsed.