Isabella García
FTX has filed a lawsuit against Binance and its co-founder Changpeng Zhao, aiming to recover $1.76 billion that it claims was fraudulently transferred. According to the filing, in July 2021, FTX transferred at least $1.76 billion to Binance and certain executives as part of a share buyback, which FTX claims constituted a “constructive fraudulent transfer.”
The filing outlines that Binance initially acquired a 20% equity stake in FTX.com in November 2019, paid for with over one million BNB tokens as part of a deal with FTX co-founder Sam Bankman-Fried, who is now incarcerated. By 2020, Binance executives expanded their involvement, acquiring an 18.4% stake in WRS, which was the parent company for Bankman-Fried’s U.S.-based crypto ventures.
In a later agreement in 2021, FTX repurchased shares previously held by Binance and its executives, paying $1.76 billion in a combination of FTX’s FTT tokens, BNB, and BUSD. According to FTX’s legal team, this transaction was not legitimate, as FTX’s affiliate, Alameda Research, was already insolvent at that time, funded by customer deposits to facilitate the deal. Caroline Ellison, former CEO of Alameda, testified that $1 billion in FTX customer funds was funneled to support this buyback.
Allegations of Fraudulent Actions and Misleading Tweets from Zhao
FTX’s lawsuit also accuses Zhao of engaging in “false, misleading, and fraudulent” tweets that allegedly destabilized FTX. It contends that Zhao’s social media statements led to an overwhelming volume of withdrawals from FTX, accelerating the exchange’s eventual collapse. Zhao’s November 2022 announcement on Twitter that Binance would begin selling its FTT holdings reportedly spurred additional market pressure on FTX’s exchange token.
A Binance representative has since responded to these allegations, dismissing them as baseless, adding, “The claims are meritless, and we will vigorously defend ourselves.”
FTX’s Broader Efforts to Recover Assets from Multiple Entities
The FTX estate has launched over 20 lawsuits in recent months, seeking to reclaim billions lost during its collapse. Targets in these cases range from former executives and investors to outside entities such as SkyBridge Capital CEO Anthony Scaramucci, game developers from Storybook Brawl, and Deltec Bank’s chairman Jean Chalopin.
This lawsuit represents the latest step by FTX in an ongoing effort to recover funds for its creditors and rebuild the company’s shattered finances.
