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Breaking: Binance And Changpeng Zhao Faces FTX Lawsuit To Return $1.8B Fund

FTX files lawsuit against Binance and its founder Changpeng Zhao to secure $1.8 billion fund, alleging fraudulent transfer by Sam Bankman-Fried in 2021.
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Breaking: Binance And Changpeng Zhao Faces FTX Lawsuit To Return $1.8B Fund

Highlights

  • FTX sues Binance and its founder Changpeng Zhao for $1.8 billion fraudulently transferred funds.
  • The filing claims that Sam Bankman-Fried allegedly transferred FTX funds via a share repurchase agreement.
  • FTX claims that Binance's statements destabilized its financial position before the collapse.

FTX has recently filed a lawsuit against Binance and its former CEO Changpeng Zhao, demanding a return of $1.8 billion. According to FTX, the fund was fraudulently transferred by its co-founder, Sam Bankman-Fried, to the leading crypto exchange. This legal development has sparked speculations in the broader crypto market, especially as it comes as FTX works to recover funds following its collapse two years ago.

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FTX Seeks $1.8B Clawback From Binance And Changpeng Zhao

According to a recent Bloomberg report, FTX alleges that the exchange and Changpeng Zhao (CZ) received the $1.8 billion as part of a share repurchase agreement in July 2021. In this transaction, Sam Bankman-Fried or SBF reportedly used a combination of the FTT, BNB, and BUSD, to repurchase approximately 20% of the international unit of FTX and 18.4% of the US-based entity.

The report notes that at the time, the total value of these assets was around $1.76 billion. In its filing, the defunct exchange contends that it and its sister firm, Alameda Research, may have been financially unstable from the beginning and were likely already insolvent by early 2021.

Based on this, the FTX estate argues that the share repurchase deal was fraudulent and should be voided to reclaim the transferred funds. Adding to the allegations, it accuses CZ of issuing misleading statements ahead of FTX’s collapse.

In November 2022, Zhao tweeted that the exchange intended to sell its FTT holdings, worth $529 million. This announcement triggered massive withdrawals from the defunct exchange, leading to a liquidity crisis. According to the filing, these statements were designed to destabilize FTX, escalating the company’s financial troubles.

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FTX Expands Legal Actions

The lawsuit against Binance and Zhao is part of FTX’s broader legal efforts in Delaware’s bankruptcy court. For context, in another latest legal action, the defunct exchange targeted Chinese nationals, alleging their engagement in large-scale money laundering.

According to the report, the exchange claimed that 26 Chinese individuals and 20 unidentified individuals laundered billions through the platform. It added that the individuals have withdrawn $468 million in cash and cryptocurrency within a critical 90-day period.

Source: FTX Historian, X

Meanwhile, the case against CZ has also caught attention as the ex-CEO of the top crypto exchange made a recent comment on FTX. Besides, it also comes just after lawyers filed to dismiss the Binance SEC lawsuit, sparking discussions in the market.

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Rupam Roy

Rupam is a seasoned professional with three years of experience in the financial market, where he has developed a reputation as a meticulous research analyst and insightful journalist. He thrives on exploring the dynamic nuances of the financial landscape. Currently serving as a sub-editor at Coingape, Rupam's expertise extends beyond conventional boundaries. His role involves breaking stories, analyzing AI-related developments, providing real-time updates on the crypto market, and presenting insightful economic news. Rupam's career is characterized by a deep passion for unraveling the complexities of finance and delivering impactful stories that resonate with a diverse audience.

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Why trust CoinGape: CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights to our readers. Our journalists and analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.
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