FTX Sues Binance And Ex-CEO Changpeng Zhao For $1.8 bln In Delaware Court
FTX Sues Binance And Ex-CEO Changpeng Zhao For $1.8 bln In Delaware Court
It is the latest battle between the two entities
Collapsed cryptocurrency firm FTX has sued Binance and its former CEO Changpeng Zhao in the US District Court for the District of Delaware, alleging that FTX management ‘fraudulently transferred’ $1.8 billion to Binance and its executives.
The lawsuit relates to Binance's sale of its stake in American entrepreneur Sam Bankman-Fried's company FTX, which it acquired in 2019, but sold back to FTX in 2021.
FTX was one of the largest cryptocurrency firms in the world before it collapsed in late 2022.
The lawsuit stated that FTX's Alameda Research division directly funded the share repurchase using tokens which then had a fair market value of $1.76 billion. However, Alameda was insolvent while buying the shares and could not afford to fund the transaction. It should not have been allowed to proceed.
The administrators for the FTX 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 at the FTX creditors' expense, as well as compensatory and punitive damages to be determined at trial.”
A Binance spokesperson remarked, "The claims are meritless, and we will vigorously defend ourselves."
Binance was set to rescue of FTX and buy its non-US unit when it was struggling to stay afloat but withdrew the deal.
Earlier this year, FTX founder Bankman-Fried was sentenced to 25 years for stealing $8 billion from customers. He has appealed the conviction.
On the other hand, Zhao was sentenced to four months after pleading guilty to violating the money laundering laws at the world's largest cryptocurrency exchange.
