FTX has filed a $1.8 billion lawsuit against Binance and its former CEO Changpeng Zhao. The lawsuit, filed as part of FTX's bankruptcy estate, aims to recover funds allegedly fraudulently transferred by FTX co-founder Sam Bankman-Fried.
The Share Repurchase Deal
FTX's lawsuit claims that Binance, Changpeng Zhao, 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. This transaction involved Binance selling back its stakes in FTX's international and US-based entities, about 20% and 18.4%, respectively. The estate argues that the funds used to buy out Binance’s shares were misappropriated, possibly from FTX customers and investors. The legal filing claims that FTX and its sister company Alameda Research were insolvent even before the deal, making the transaction a “fraudulent transfer.”
Allegations Against Changpeng Zhao and Binance
The FTX estate alleges that Changpeng Zhao’s actions were part of a broader scheme to destabilize FTX. One of the lawsuit’s focal points is a November 6, 2022, tweet by Zhao announcing that Binance intended to sell its FTT holdings, worth approximately $529 million at the time. This announcement reportedly caused mass withdrawals and a liquidity crisis at FTX, leading to the exchange’s eventual collapse. FTX’s estate claims that Zhao’s tweet was a calculated move to harm FTX, labeling it as “false, misleading, and fraudulent.” The filing also points to other tweets from Zhao and Binance that it argues were intended to mislead FTX’s customers and destabilize the market. This lawsuit is part of a broader legal strategy by FTX’s estate to recover funds from various parties associated with FTX’s bankruptcy.
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, on November 9. Alameda is seeking 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 that 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, further complicating the case.
The lawsuits initiated by FTX and Alameda Research highlight the complexities surrounding the aftermath of FTX’s collapse. These legal actions serve as attempts to recover funds and shed light on the alleged financial misconduct.
