FTX is back in the headlines, but this time it’s not just about the collapse. The bankrupt crypto exchange is now suing Binance and its former CEO, Changpeng “CZ” Zhao, for a hefty $1.8 billion, claiming a fraudulent repurchase of shares. According to CoinDesk, FTX alleges the deal, which was set up by former CEO Sam Bankman-Fried in 2021, was orchestrated under dubious conditions, with the use of worthless tokens and a major misstep in terms of solvency.
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FTX Claims Fraudulent Transactions
The legal battle centers on Bankman-Fried’s purchase of Binance’s stake in FTX using a mix of FTX’s native token, FTT, along with Binance’s own coins BNB (BNB-USD) and BUSD (BUSD-USD). The total value at the time was about $1.76 billion. But here’s the kicker: FTX claims that Bankman-Fried’s trading firm, Alameda Research, was already insolvent. As FTX filed in the U.S. Bankruptcy Court for the District of Delaware, Caroline Ellison, Bankman-Fried’s second-in-command, famously said, “We don’t really have the money for this.” This shows us the shaky financial ground they were standing on.
Binance Responds, Claims Merits Are Lacking
Of course, Binance is pushing back. In an email statement shared with CoinDesk, a spokesperson for the company said, “The claims are meritless, and we will vigorously defend ourselves.” FTX, on the other hand, argues that the transaction was fraudulent, given the insolvency and the eventual crash in the value of the FTT tokens. The lawsuit also targets Binance’s role in worsening FTX’s downfall, accusing CZ of spreading “false, misleading and fraudulent” tweets that further damaged FTX’s already fragile position.
