FTX, the bankrupt cryptocurrency exchange, is suing Binance and its former CEO, Changpeng Zhao, over a claim that $1.8 billion was "fraudulently transferred" to Binance in a 2021 deal. The lawsuit, filed in the U.S. state of Delaware, alleges that FTX’s Alameda Research division funded the buyback of shares from Binance despite being insolvent, ultimately harming FTX's creditors.
In 2019, Binance initially acquired a stake in FTX, which it later sold back to the company in 2021. FTX claims that Alameda Research, despite its insolvency, funded the purchase with $1.76 billion in tokens. FTX administrators argue that the transaction should never have occurred, aiming to recover the funds on behalf of FTX’s creditors, along with additional damages.
The administrators for FTX’s estate stated, “The Plaintiffs seek to recover, for the benefit of FTX’s creditors, at least $1.76 billion that was fraudulently transferred to Binance and its executives.” The lawsuit also calls for compensatory and punitive damages, with amounts to be determined at trial.
Binance has responded, calling the claims “meritless,” while pledging a vigorous defense. The lawsuit marks the latest chapter in the complex legal saga between the two crypto giants, once fierce rivals in the sector.
The lawsuit follows a turbulent period for FTX. Its founder, Sam Bankman-Fried, was sentenced to 25 years in prison earlier this year for embezzling $8 billion from customers. Zhao, who led Binance when it nearly acquired FTX’s non-U.S. unit during FTX's collapse in 2022, was sentenced to four months in prison for violating U.S. anti-money laundering regulations.
