The estate of collapsed crypto exchange FTX has filed a suit with a Delaware court against Binance Holdings and its former CEO Changpeng Zhao, claiming shares worth $1.76 billion were “fraudulently” transferred by Sam Bankman-Fried.
FTX cites a 2021 transaction in which Binance, Zhao and others exited their investment in the crypto exchange, as part of a share repurchasing agreement. The executives sold a 20% stake in FTX and an 18.4% stake in its US-based entity West Realm Shires back to the company, Bloomberg reported.
FTX claims the platform’s Alameda Research division directly funded the share repurchase using a mix of FTX’s exchange token FTT and Binance-branded coins BNB and BUSD valued at $1.76 billion at the time.
However, the lawsuit alleges Alameda “was insolvent at the time of the share repurchase and could not afford to fund the transaction”. As a result, the platform claims the deal was a “constructive fraudulent transfer”, which should have not been allowed to proceed.
The FTX lawsuit seeks “to recover, for the benefit of FTX’s creditors, at least $1.76 billion that was fraudulently transferred to Binance and its executives at the FTX creditors’ expense, as well as compensatory and punitive damages to be determined at trial,” as per the filing, also seen by Reuters.
Binance has denied the allegation, with a spokesperson stating the claims are “meritless, and we will vigorously defend ourselves.”
FTX also accused Mr Zhao of posting a series of “false, misleading, and fraudulent tweets” shortly before FTX’s collapse, that aimed to “destroy his rival”. In the social media posts, A Zhao stated that Binance intended to sell its FTT tokens, worth an estimated $529 million at the time, causing withdrawals from the exchange to skyrocket.
“Liquidating our FTT is just post-exit risk management, learning from LUNA,” Zhao said in a tweet posted on November 6. “We gave support before, but we won’t pretend to make love after divorce.”
Once the leader of a $32 billion empire, FTX founder Bankman-Fried was sentenced in March 2024 to 25 years in prison for stealing $8 billion from customers. Binance, then led by Zhao, negotiated the acquisition of FTX’s non-US unit in November 2022 but later withdrew its offer. Shortly after, FTX filed for bankruptcy. Zhao was sentenced to four months in prison after pleading guilty to violating US anti-money laundering law.
Since the company’s collapse, the FTX estate has filed a series of lawsuits in the bankruptcy court of Delaware against former White House communications officer Anthony Scaramucci, digital-asset exchange Crypto.com and the Mark Zuckerberg-founded FWD.us group, among others.
