FTX, in bankruptcy, has filed a lawsuit against Binance Holdings Ltd. and its former CEO Changpeng Zhao, seeking to recover $1.8 billion allegedly transferred fraudulently.
Background: The Share Repurchase Deal
FTX's lawsuit claims that Binance, CZ, and other Binance executives received $1.76 billion in FTX tokens (FTT) and Binance-branded coins (BNB and BUSD) as part of a July 2021 share repurchase deal. FTX alleges that the funds used to buy out Binance’s shares were misappropriated, possibly from FTX customers and investors. The filing claims that FTX and its sister company Alameda Research were insolvent even before the deal, labeling the transaction a “fraudulent transfer.”
Allegations Against CZ and Binance’s Role
FTX alleges that CZ's actions were part of a broader scheme to destabilize FTX. One focal point of the lawsuit is CZ’s November 6, 2022 tweet announcing Binance's intention to sell its FTT holdings, worth approximately $529 million. This announcement reportedly triggered mass withdrawals and a liquidity crisis at FTX, leading to its collapse. The lawsuit also points to other tweets by CZ and Binance that allegedly misled FTX's customers and destabilized the market.
Lawsuit Against Waves Founder
In another legal move, FTX’s sister company Alameda Research filed a lawsuit against Waves platform founder Aleksandr Ivanov to recover $90 million in assets tied to Vires.Finance. Alameda claims Ivanov artificially inflated Waves' value and siphoned funds from Vires. The case is complicated by Ivanov’s minimal cooperation in asset recovery efforts.
FTX's lawsuit against Binance and its former CEO is part of a broader strategy to recover funds post-bankruptcy. It highlights the complexity and multi-layered nature of financial dealings in the cryptocurrency world.
