FTX is suing Binance Holdings and its former Chief Executive Officer Changpeng ‘CZ’ Zhao over an alleged fraudulent shares repurchase by Sam Bankman-Fried, valued at $1.76 billion at the time.
According to a Bloomberg report published on Nov. 11, CZ and other Binance executives received the funds as part of a shares repurchase deal with then-CEO of FTX Sam Bankman-Fried in July 2021.
Based on the legal filing, Bankman-Fried sold around 20% of FTX’s international unit stakes and 18.4% from its U.S-based branch. Bankman-Fried paid for the repurchase with a mix of FTX’s token FTT and Binance-issued coins BSB(BSB) and BUSD(BUSD). The transaction was worth around $1.76 billion at the time.
However, the FTX team are claiming that the transfer made by Bankman-Fried to Binance was a fraud. This is because when the repurchase deal with Binance occurred, FTX and its sister firm Alameda Research were already “balance-sheet insolvent.” Therefore, they believe the transfer was fraudulently made.
Not only that, FTX is also coming after CZ for posting what they claim to be a number of “false, misleading, and fraudulent tweets” in the days leading up to the crypto exchange’s collapse. The estate claimed that CZ’s posts were made to purposely bring down his competitor, calling his content “maliciously calculated to destroy his rival.”
One such case occurred in November 2022, when CZ posted a tweet that claimed Binance had intended to sell $529 million worth of FTT tokens. His tweet started an avalanche of withdrawals from the exchange by spooked traders. Bloomberg sent Binance a request for comment, however the Binance spokesperson did not send through a response to the allegations.
Former Binance CEO CZ was released at the end of September after completing a four-month prison sentence. He has been out-and-about at cryptocurrency events and giving public interviews. Meanwhile, Sam Bankman-Fried is currently serving a 25-year sentence in a federal prison facility since last year.
However, his new lawyer has since challenged the ruling under the argument that the judge presumed Bankman-Fried as guilty from the start.
Aside from Binance, FTX has filed around 23 lawsuits against former investors, affiliates and clients in an attempt to retain money for creditors. Among the plaintiffs are former White House communications director Anthony Scaramucci and his hedge fund SkyBridge Capital, digital-asset exchange Crypto.com and political groups such as FWD.US.
Additionally, FTX‘s sister hedge fund Alameda Research has also filed a lawsuit against Waves founder Sasha Ivanov, seeking $90 million worth of cryptocurrencies.
