FTX has filed a lawsuit against Binance Holdings and its former CEO, Changpeng “CZ” Zhao, accusing them of receiving nearly $1.8 billion in a fraudulent transaction initiated by Sam Bankman-Fried. According to a Bloomberg report dated November 11, the funds were part of a share buyback arrangement between Bankman-Fried and Binance executives in July 2021.
The legal filing claims that Bankman-Fried repurchased significant stakes in FTX’s international and U.S. operations, with the payment amounting to $1.76 billion. He reportedly used a mix of FTX’s native token (FTT) and Binance tokens (BNB and BUSD) to complete the transaction. FTX now argues that the transfer was made under fraudulent conditions, asserting that both FTX and its sister company, Alameda Research, were already financially insolvent when the buyback occurred.
In addition to the buyback claims, FTX accuses CZ of publishing misleading statements on social media in the days leading up to FTX’s collapse. The lawsuit points to a November 2022 tweet in which CZ announced that Binance intended to liquidate $529 million worth of FTT tokens. The announcement allegedly triggered a wave of withdrawals from FTX, causing panic among traders and exacerbating the crisis. FTX’s legal team describes CZ’s tweets as “maliciously calculated” attempts to damage FTX’s business and eliminate a competitor.
Bloomberg reached out to Binance for a comment, but the company has not yet responded to the allegations.
CZ, recently released after a four-month prison sentence, has been actively participating in cryptocurrency events and interviews. Meanwhile, Bankman-Fried, who is serving a 25-year prison sentence, is appealing his conviction, with his legal team arguing that the judge showed bias.
This lawsuit is one of several that FTX has recently filed in an attempt to reclaim funds for its creditors. Other targets include prominent investors and partners such as former White House communications director Anthony Scaramucci and his hedge fund, SkyBridge Capital, as well as Crypto.com and political advocacy group FWD.US.
Additionally, FTX’s sister company, Alameda Research, has launched its own lawsuit, seeking $90 million in cryptocurrencies from Waves founder Sasha Ivanov.
