The FTX estate has filed a lawsuit against Binance and its former CEO, Changpeng Zhao, seeking to recover $1.76 billion allegedly transferred fraudulently during a share repurchase deal in July 2021. According to the lawsuit, FTX Co-Founder Sam Bankman-Fried used a mix of FTX and Binance-branded cryptocurrencies to buy back Binance's 20% stake in FTX's international unit and 18.4% stake in its U.S.-based entity. The FTX estate claims the transaction was unlawful, asserting that FTX and its sister company Alameda Research were insolvent at the time due to large-scale fraud orchestrated by Bankman-Fried and other executives. Bankman-Fried is currently serving a 25-year prison sentence for his role in misappropriating customer funds.
The lawsuit also alleges that Zhao’s November 2022 tweets, announcing Binance's plan to liquidate $529 million worth of FTX tokens, precipitated a surge of withdrawals that hastened FTX’s collapse. Binance denies the accusations, describing them as meritless, and vows to defend itself vigorously. This legal action is part of over 20 lawsuits filed by the FTX estate to recover funds for creditors, including a court-approved plan to repay $16 billion to affected customers. The downfall of FTX has been widely attributed to Bankman-Fried’s mismanagement and fraudulent practices.
