A new lawsuit by the FTX estate claims Binance and its former CEO were parties to an allegedly fraudulent share repurchase transaction.
FTX Wants $1.8 Billion From Binance and Changpeng Zhao
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FTX is Going After Its Former Investors
FTX wants its money back. According to court documents released by FTX estate on Sunday, Binance, Changpeng Zhao (CZ), and other Binance executives received $1.8 billion as part of a share repurchase agreement with Bankman-Fried, the now-incarcerated co-founder of FTX in July 2021.
At the time, the transaction was based on their combined ownership of 20% of FTX’s international unit and 18.4% of its U.S.-based entity. This is the basis for FTX’s lawsuit, as the estate filing claims FTX was balance-sheet insolvent by early 2021, allegedly making the transaction fraudulent.
According to the filing, Bankman-Fried used a combination of FTX’s exchange token FTT and Binance-branded coins BNB and BUSD, which were worth $1.76 billion at the time, to pay for the stock repurchase.
CZ in particular is also being charged by FTX with publishing “false, misleading, and fraudulent tweets,” which was “maliciously calculated to destroy his rival.” The filing said CZ shared a tweet on November 6, 2022, which stated that Binance planned to sell its FTT tokens which were valued at about $529 million at the time. This in turn caused withdrawals from FTX exchange to soar.
The case is one of several that FTX has brought in Delaware’s bankruptcy court against its former affiliates, clients, and investors. According to court filings, other defendants include political organizations like the Mark Zuckerberg-founded FWD.US and digital asset exchange Crypto.com.
