FTX sues Binance and ex-CEO Zhao, demanding $1.8 billion in recovery
FTX has filed a lawsuit against Binance Holdings and its former Chief Executive Officer Changpeng Zhao, seeking to recover nearly $1.8 billion (approximately Rs. 15,189 crore) allegedly fraudulently transferred by Sam Bankman-Fried.
Binance, Zhao and other Binance executives received the money as part of a stock repurchase deal in July 2021 with Bankman-Fried, the FTX co-founder who is now in prison. In that transaction, they sold stakes of about 20 percent in FTX’s international unit and 18.4 percent in the U.S.-based entity, according to a legal filing by the FTX estate on Sunday.
Bankman-Fried paid for the share buyback using a mix of FTX’s exchange currency FTT and Binance-branded coins, BNB and BUSD, which were worth $1.76 billion (approximately Rs. 14,852 crore) at the time, according to the filing .
FTX and its sister trading house Alameda Research “may have been insolvent from the outset and were certainly insolvent on the balance sheet in early 2021,” the estate said in the filing. As a result, the stock repurchase agreement was fraudulently completed, the company 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 intended to destroy its rival.” A November 6, 2022 tweet from Zhao stated that Binance planned to sell its FTT tokens, which were worth around $529 million (roughly Rs. 4,464 crore) 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 did not immediately respond to an emailed request for comment
The lawsuit is one of several FTX has filed against former investors, affiliates and customers in Delaware bankruptcy court. Other defendants include former White House communications official Anthony Scaramucci, digital asset exchange Crypto.com and political groups such as Mark Zuckerberg-founded FWD.US, according to court documents.
© 2024 BloombergLP
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
