The bankrupt #cryptocurrencyexchange FTX filed a lawsuit against Binance and its former CEO #changpengzhao (CZ)
FTX demands that Binance and Zhao reimburse the collapsed trading platform $1.8 billion, Bloomberg writes.
The history of the transaction and allegations of fraud
The lawsuit alleges that in July 2021, Binance and its management, including Changpeng Zhao, struck a deal with FTX co-founder Sam Bankman-Fried. As part of the deal, representatives of the world's largest cryptocurrency exchange sold about 20% stake in FTX's international division and 18.4% in its U.S. division.
Bankman-Fried paid for the repurchase of shares. The amount amounted to $1.76 billion in FTX tokens ($FTT
), Binance Coin ($BNB
) and Binance USD (BUSD). However, according to the plaintiffs, FTX was already financially insolvent at that time. Therefore, the transfer of funds to Binance management can be considered a fraudulent transaction.
FTX representatives also accused CZ of intentionally undermining the crypto exchange's reputation on the eve of its collapse. In November 2022, Zhao posted a series of “false and misleading” tweets aimed at destroying a competitor's image.
One of these tweets was a post from November sixth, in which the ex-Binance CEO announced plans to sell all of FTT's tokens (worth about $529 million). This triggered a massive outflow of funds from FTX, the lawsuit says.
So far, Binance representatives have not commented on the situation.
Amid the news of the lawsuit, the price of the FTX token (FTT) rose by more than 20% in the moment. According to CoinGecko, at the time of writing, the asset is trading at $2.14, having risen by a total of 11.8% over the past day.
The news is supplemented by