The bankrupt FTX exchange against the Binance exchange and its former CEO Chang Peng Zhao (CZ) has sued to recover $1.76 billion. FTX claims these funds will be available in July 2021 as part of a share buyback agreement with Sam Bankmanfriedco-founder of FTX, illegally transferred to Binance, Zhao and other Binance executives.
According to the petition submitted to the court, Binance sold 20% of its shares in the international unit of FTX and 18.4% of the shares in its American entity. Bankmanfried used a combination of cryptocurrencies under the FTX brand and Binance to buy these shares. FTX alleges that the share repurchase transaction was conducted illegally because it was unable to finance the transaction due to extensive fraud by Bankmanfried and other executives of FTX and Alameda.
Benkmanfried, who is now serving 25 years in prison, was convicted of fraud last year for using client funds for investments, political donations and real estate purchases.
FTX’s lawsuit against Binance alleges that former Binance CEO Zhao posted a series of fake and misleading posts on the social network X that were maliciously calculated to destroy their rival, FTX. According to FTX, Zhao’s post on November 6, 2022 (Aban 15, 1403) about Binance’s decision to sell $529 million in FTX tokens caused a predictable wave of withdrawals that contributed to the collapse of the said cryptocurrency exchange.
The influx of withdrawals from FTX eventually led to the exposure of the financial paper house in this exchange, and then we saw criminal charges against Benkmanfried. The United States Securities and Exchange Commission (SEC) announced that the collapse of FTX occurred due to the personal embezzlement of customer funds by Bankman Fried and that the said operation was a fraud from the beginning.
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A Binance spokesperson told Bloomberg that the allegations against the company are baseless and that they will vigorously defend themselves.
FTX’s lawsuit is one of 20 filed by the exchange recently to recover billions of dollars owed to creditors. Among these measures, one can refer to the complaint against Alameda Alexander Ivanovthe founder of the Waves blockchain, hinted at retrieving $90 million that had previously been deposited into a Waves-based liquidity platform called Vires. Last month, FTX’s plan to repay $16 billion to customers who lost money during the company’s collapse also received court approval.
