Bankrupt crypto exchange FTX is reportedly suing Binance and its former CEO Changpeng Zhao over alleged fraudulent transfers initiated by Sam Bankman-Fried.
The estate of FTX, which collapsed in 2022 when Bankman-Fried mismanaged client funds, is seeking to recover $1.8 billion from Binance, which it says was sent to Zhao in a stock buyback deal, Bloomberg reports.
Binance, Zhao and other exchange executives allegedly received the money from Bankman-Fried in July 2021 when he bought back 20% of FTX’s international unit and 18.4% of the US-based entity, legal filings show .
Bankman-Fried paid for the share buyback using FTT – FTX’s exchange token – and Binance’s BNB and its own now-defunct stablecoin BUSD.
Lawyers for the FTX estate say that since the exchange was “certainly insolvent on its balance sheet” at the time of the transfer, the share repurchase agreement was fraudulent in nature.
FTX also alleges that Zhao created “false, misleading and fraudulent tweets” that were “maliciously intended to destroy his rival” shortly before the stock market collapsed – an allegation that Bankman-Fried also made in a “post-mortem” blog in January . from 2023.
A Binance spokesperson told Bloomberg that FTX’s claims were “meritless” and that Binance was prepared to defend itself.
Bankman-Fried is currently serving a 25-year prison sentence. Caroline Ellison, also the exchange’s former CEO, is serving a two-year prison sentence, while former co-CEO of FTX Digital Markets Ryan Salame is serving a 7.5-year prison sentence.
FTX co-founder and former CTO Gary Wang is currently working with US authorities and helping the government develop tools to track illegal activity on crypto exchanges. His lawyers are still fighting for Wang to avoid jail time.
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