FTX Sues Binance And Ex-CEO Zhao For $1.8 Billion

FTX has filed a lawsuit against Binance and its former CEO, Changpeng Zhao, claiming at least $1.76 billion in damages related to a 2021 transaction. The case, filed in a Delaware court on Sunday, centers around a deal in which Binance and Zhao sold a 20% stake in FTX and an 18.4% stake in its U.S.-based subsidiary, West Realm Shires, back to FTX.

FTX alleges that the deal, orchestrated by former CEO Sam Bankman-Fried, involved the repurchase being funded by FTX’s subsidiary, Alameda Research, using a combination of exchange tokens and Binance's stablecoin. The lawsuit contends that Alameda was insolvent at the time of the transaction and unable to afford the buyback, labeling the deal a "constructive fraudulent transfer."

In response, Binance denied the accusations, with a spokesperson stating that the claims were "meritless" and pledging to "vigorously defend" the company.

The lawsuit is the latest chapter in the bitter fallout from the collapse of FTX, once a $32 billion cryptocurrency exchange that collapsed in 2022. FTX's bankruptcy followed a surge in customer withdrawals, spurred by the discovery of financial mismanagement and fraudulent activity, leading to the criminal conviction of Bankman-Fried on charges of fraud and theft.

The FTX estate also accuses Zhao of triggering the exchange’s demise through a series of "false, misleading, and fraudulent tweets," including a November 6 post on X (formerly Twitter) where Zhao announced Binance's decision to liquidate its remaining holdings in FTX’s native token, FTT. This public declaration is said to have triggered a wave of withdrawals, further destabilizing FTX.