FTX has filed a lawsuit against Binance and its former CEO Changpeng Zhao, seeking to recover $1.8 billion allegedly transferred fraudulently in a share repurchase deal.
Background of the Share Repurchase Deal
FTX's lawsuit claims Binance, CZ, and other executives received $1.76 billion in FTX (FTT) tokens and Binance-branded coins (BNB and BUSD) in a July 2021 share repurchase deal. In this transaction, Binance reportedly sold back its stakes in FTX's international and US-based entities, about 20% and 18.4%, respectively. The FTX bankruptcy estate argues that the funds to buy out Binance's shares were misappropriated, possibly from FTX customers and investors. The filing claims FTX and its sister company Alameda Research were insolvent even before the deal, making the transaction a 'fraudulent transfer.'
Allegations Against CZ and Binance's Role
The FTX estate alleges that CZ's actions were part of a broader scheme to destabilize FTX. One of the focal points of the lawsuit is a tweet by CZ on November 6, 2022, stating that Binance intended to sell its FTT holdings, worth approximately $529 million. This announcement reportedly caused mass withdrawals and a liquidity crisis at FTX, leading to its eventual collapse. The FTX estate claims CZ's tweet was a calculated move to harm FTX's reputation and drive users away from the platform. The filing also points to other tweets from CZ and Binance that it argues were intended to mislead FTX’s customers and destabilize the market.
Lawsuit Against Waves Founder
In another legal move, FTX's sister company Alameda Research has filed a separate lawsuit against Aleksandr Ivanov, the founder of the blockchain platform Waves. Alameda seeks to recover at least $90 million in assets allegedly tied to Vires.Finance, a liquidity platform on the Waves blockchain. According to Alameda's filing, the company deposited $80 million in USDT and USDC on Vires.Finance, which was later converted to around $90 million in Waves' stablecoin USDN. Alameda claims Ivanov artificially inflated the value of Waves and siphoned funds from Vires. Efforts to recover these funds have reportedly been met with minimal cooperation from Ivanov, complicating the case.
This lawsuit is part of a broader legal strategy by FTX's estate to recover funds from various parties associated with FTX's bankruptcy. Other defendants in FTX's recovery efforts include prominent figures and companies in the crypto industry.
