In a dramatic turn in the crypto world, FTX is taking legal action against Binance and its former CEO, Changpeng Zhao (CZ), as it seeks to recover nearly $1.8 billion that former FTX CEO Sam Bankman-Fried (SBF) transferred to Binance in a high-stakes 2021 deal. The move underscores FTX’s efforts to retrieve funds following its massive collapse, as it pursues this lawsuit along with a string of 23 others filed in the Bankruptcy Court in Delaware.
A Quest to Reclaim Funds in a High-Profile Feud
The $1.8 billion claim is tied to a 2021 stock repurchase agreement, in which FTX’s international and U.S. entities bought back shares from Binance. In the exchange, Binance received approximately $1.76 billion worth of FTX’s token (FTT) alongside Binance’s own token, BNB, and stablecoin, BUSD. FTX now argues that the repurchase was fraudulent due to FTX’s and Alameda Research’s alleged insolvency at the time of the transaction, making the financial maneuver invalid. Additionally, the suit accuses Bankman-Fried of “reckless and manipulative” behavior, asserting that he exploited company resources to bolster his influence in the finance world.
This lawsuit follows another case that FTX filed against Anthony Scaramucci and his investment firm, SkyBridge Capital, over claims of influence-peddling and alleged misuse of funds. These legal actions are part of FTX’s comprehensive strategy to recoup money and address creditor claims, a critical need amid its bankruptcy proceedings.
CZ’s Role and Binance’s Response
The lawsuit also highlights CZ’s role in the saga leading up to FTX’s downfall. According to the filing, CZ’s public decision to sell Binance’s FTT holdings in 2022 triggered a wave of withdrawals, further destabilizing FTX. FTX’s legal team claims this decision, followed by a tweet hinting at Binance’s intention to sell its FTT tokens, led to a panic that catalyzed FTX’s collapse. Binance, meanwhile, has yet to issue an official response to the lawsuit.
FTT Token Surges Despite Turbulent Waters
Amid this legal turmoil, FTX’s FTT token is seeing a surprising surge. Recently, it jumped by nearly 29%, with a trading price of around $2.06 and a trading volume reaching $120 million. Whether this rally can hold as the lawsuits unfold remains to be seen, but the FTT token’s rise shows that interest in FTX's assets hasn’t entirely dissipated.
FTX's Strategy to Recover SBF’s “Influence Investments”
FTX’s aggressive legal campaign doesn’t stop with Binance and SkyBridge Capital. The estate is scrutinizing deals Bankman-Fried made with various affiliates to expand his influence in politics and finance during crypto’s turbulent market downturns. In the court filing, FTX alleges that SBF invested a staggering $67 million in SkyBridge Capital to rescue the struggling firm, raising eyebrows over the real intent behind these “influence investments.”
Bankman-Fried also took a 30% stake in SkyBridge during this period, but FTX claims this stake provided little tangible benefit to the crypto exchange. Rather than yielding returns, FTX alleges, the investments were primarily intended to elevate SBF’s profile in the financial and political spheres, branding them as costly moves to prop up SBF’s reputation rather than true business opportunities.
As bankruptcy proceedings continue, FTX’s relentless pursuit of funds paints a picture of a company focused on recouping resources wherever possible to pay back creditors. From Binance to SkyBridge, this litigation could potentially reshape the crypto landscape, setting new precedents for accountability and due diligence. Meanwhile, industry watchers are keeping a close eye on how the battle between FTX, Binance, and their former CEOs unfolds—one that could have ripple effects throughout the industry.
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