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FTX has filed a lawsuit against Binance and its former CEO Changpeng Zhao (CZ).
The bankrupt crypto exchange is seeking nearly $1.8 billion from the world's biggest crypto exchange on the premise that FTX co-founder Sam Bankman-Fried (SBF) improperly transferred funds.
In 2021, a share repurchase agreement saw CZ and other Binance executives selling their FTX stakes. Valued at $1.76 billion, the transaction involved SBF paying for the shares with a combination of FTT Tokens, BNB, and BUSD.
FTX now claims that both it and Alameda Research were financially insolvent since their inception and were facing financial difficulty in early 2021. The estate thereby believes the share buyback transaction was fraudulent.
CZ is also accused of posting “false, misleading, and fraudulent tweets” ahead of FTX's collapse, which was “maliciously calculated to destroy his rival.”
"As part of Binance’s exit from FTX equity last year, Binance received roughly $2.1 billion USD equivalent in cash (BUSD and FTT)," CZ tweeted on 6 November 2022. "Due to recent revelations that have came to light, we have decided to liquidate any remaining FTT on our books."
As part of Binance’s exit from FTX equity last year, Binance received roughly $2.1 billion USD equivalent in cash (BUSD and FTT). Due to recent revelations that have came to light, we have decided to liquidate any remaining FTT on our books. 1/4
— CZ 🔶 BNB (@cz_binance) November 6, 2022
Binance responded by stating that FTX's claims are "meritless" and that the exchange will "vigorously defend [themselves]."
Last week, CZ returned to the public eye. The billionaire crypto mogul emerged from U.S. federal prison in April after a four-month stint following a legal settlement with the U.S. Department of Justice that included a $4.3 billion fine.
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Despite his return to the crypto scene, CZ isn’t picking up where he left off as CEO of Binance, the world’s largest cryptocurrency exchange. Instead, he's embracing a new role—one that distances him from the day-to-day operations of the exchange he built in 2017 and helped propel to global dominance.
Earlier this month, former FTX's head of engineering, Nishad Singh, was spared prison time for his involvement in the exchange's collapse.
Initially facing a maximum sentence of 75 years, Singh convinced the judge that his involvement with the exchange's fraud was far more limited than SBF or Caroline Ellison, who received 25 years and 2 years behind bars respectively.
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