FTX has filed a $1.8 billion lawsuit against Binance and its former CEO Changpeng Zhao, accusing them of fraud and a campaign to discredit FTX.
The bankrupt #FTX exchange has filed a $1.8 billion lawsuit against #Binance and its former CEO Changpeng Zhao (CZ), accusing them of fraud and a campaign to discredit FTX. The suit follows 23 lawsuits filed by FTX last Friday seeking the return of misused funds. On Sunday, the lawsuit was filed in Delaware bankruptcy court, where FTX is seeking to recover $1.76 billion for its creditors.
According to the lawsuit, FTX alleges that former CEO Sam Bankman-Fried (SBF) orchestrated a deal for Binance to purchase FTX shares in 2021; between 2019 and 2020, Binance would acquire 20% of FTX International and 18.4% of its U. S. subsidiary and became one of FTX's largest shareholders. However, by July 2021, Bankman Fried paid $1.76 billion to buy back Binance shares in a mix of FTX tokens, Binance coins (BNB), and Binance USD (BUSD).
The FTX estate claims the deal was fraudulent, stating that FTX was likely insolvent from the start and had no apparent balance sheet in early 2021. Court documents also include testimony from Caroline Allison, the former CEO of Alameda Research, who said the buyout was funded by customers. Ellison, who is now a witness in the criminal trial of Bankman and Fried, claims the deal was part of an attempt to hide FTX's financial problems.
The lawsuit further accuses Zhao of launching a "campaign to destroy FTX" and attempting to damage FTX's reputation.
The lawsuit alleges that Zhao used Twitter to spread "false, misleading and fraudulent information" in an attempt to damage FTX's reputation and drive customers away from the platform. Specifically, the lawsuit points to a tweet posted by Mr.
Zhao on November 6, 2022, in which he announced plans to sell Binance's stake in FTT. This announcement was made after several revelations of FTX's finances came to light, leading to a surge in withdrawal requests.
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