Coinspeaker FTX Estate Sues Binance to Recover $1.8B in Alleged Fraudulent Transfer
The estate handling the bankruptcy of FTX has intensified its efforts to reclaim assets amid its ongoing proceedings, setting its sights on major cryptocurrency exchange Binance. In a lawsuit filed on 10 November, FTX’s estate accused Binance, its former CEO Changpeng Zhao (CZ), and other senior executives of fraud.
The plaintiffs claimed that Binance and its executives received $1.76 billion in a transaction the estate now labels as fraudulent.
FTX May Have Been Insolvent from Day One
The legal action traces back to a 2021 stock repurchase deal between the two crypto giants. Under the terms of that agreement, Sam Bankman-Fried (SBF), co-founder of FTX – now serving a 25-year prison sentence on separate charges – sold Binance a significant stake in both FTX International and its US arm, West Realm Shires Services, which traded as FTX US. Specifically, the company sold approximately 20% of the international exchange and 18.4% of its US counterpart to Binance.
However, SBF later repurchased the shares using a combination of assets, including FTX’s native token, FTT, and Binance’s BNB BNB $623.4 24h volatility: 2.2% Market cap: $91.03 B Vol. 24h: $2.54 B and Binance USD tokens. At the time, these assets were collectively valued at $1.76 billion. The lawsuit now claims that the repurchase transaction was conducted while FTX and its sister company, Alameda Research, were financially unstable.
The estate’s filing argued that FTX and Alameda “may have been insolvent from inception” and noted that by early 2021, both entities were “balance-sheet insolvent”. As a result, the estate contends that the transfer constitutes a fraudulent transaction designed to benefit Binance while leaving FTX’s customers and creditors at a disadvantage.
SBF Accused CZ of Playing Him
This latest legal maneuver is part of a broader effort by the FTX bankruptcy estate to recover funds lost in the complex financial web surrounding the exchange’s downfall. The collapse of FTX, once valued in the billions, has reverberated throughout the crypto world, prompting extensive investigations, legal battles, and a re-evaluation of risk management within the industry.
Under CZ’s leadership, Binance was once an ally and investor in FTX, but the relationship deteriorated ahead of FTX’s dramatic collapse in late 2022. In the early days of FTX’s liquidity crisis, CZ and SBF initially agreed on a buyout deal, but it ultimately fell apart. Binance revealed that the financial troubles at FTX were too deep for them to resolve.
“Our goal was to support FTX’s customers and provide liquidity, but the issues were beyond our control or ability to help,” Binance stated.
Following the failed deal, SBF blamed CZ for FTX’s downfall, accusing the former Binance CEO of manipulating him.
“My guess is he played me, and he played it well. I think he probably did better than he thought he would. I don’t think he anticipated this outcome. He likely expected damage, but not to this extent,” SBF said.
next
FTX Estate Sues Binance to Recover $1.8B in Alleged Fraudulent Transfer
