FTX Estate Sues Binance and Former CEO Zhao for $1.8 Billion Over “Fraudulent” Share Deal

Charlene Lensburg
Mon, 11 Nov 2024 13:05:41 +0000
Bankruptcies, ticker, Alameda Research, Binance, Changpeng Zhao, CZ, FTX

It seems that the bankruptcy of the US crypto exchange FTX will continue to cause ripples across the crypto scene. In a high-stakes lawsuit, the FTX estate is targeting Binance and its former CEO, Changpeng Zhao (CZ), seeking $1.8 billion over a controversial 2021 share buyback deal. Allegations include claims of a “constructive fraudulent transfer” and accusations of tweets that allegedly accelerated FTX‘s collapse.

Key Points:

The Lawsuit: Filed in Delaware, the FTX estate claims Binance and CZ exited their FTX stake in 2021, selling a 20% stake in FTX and an 18.4% stake in U.S.-based West Realm Shires back to FTX.

The Allegations: The suit alleges the deal was a “constructive fraudulent transfer,” funded by FTX’s Alameda Research despite its insolvency. The buyback was financed using Binance and FTX tokens, along with Binance’s stablecoin.

Binance’s Response: Binance dismissed the claims as “meritless” and stated it will “vigorously defend” against the lawsuit.

Twitter Firestorm: The suit also accuses CZ of sharing misleading tweets that, according to FTX, provoked a wave of withdrawals, speeding FTX’s downfall.

Short Narrative:

The estate of FTX has intensified its legal battle in a bid to recover $1.8 billion, accusing Binance and ex-CEO CZ of fraudulent actions in a 2021 share repurchase. The FTX estate claims that Alameda, FTX’s hedge fund arm, was insolvent at the time, labeling the transaction a “constructive fraudulent transfer.” Binance, however, denies wrongdoing and has pledged to fight the claims in court.

Adding to the drama, the lawsuit points to CZ’s tweets in November, which FTX alleges fueled panic among investors, worsening its liquidity crisis. In one cited post, CZ hinted at liquidating FTT holdings, sparking a “predictable avalanche of withdrawals.”

Actionable Insight:

This case underscores the intense legal confrontations unraveling in the crypto world as major players pursue claims related to FTX’s high-profile collapse. Binance’s defense, combined with the allegations of market-moving tweets, adds complexity to the already volatile landscape.

Call for Information:

FinTelegram seeks insights from readers with knowledge of the 2021 FTX-Binance deal or CZ‘s actions leading up to FTX’s collapse. The crypto community deserves clarity on the impact of such deals on market stability.