Bankrupt cryptocurrency exchange FTX is suing Binance and its former CEO, Changpeng Zhao, for a whopping $1.8 billion. They claim this money was transferred fraudulently by Sam Bankman-Fried.
The FTX estate is trying to get back funds that were allegedly sent to Zhao during a stock buyback deal. This deal took place back in July 2021. At that time, Bankman-Fried bought back 20% of FTX’s international unit and 18.4% of its U.S. entity.
To pay for this buyback, Bankman-Fried used FTT, the exchange’s own token, along with Binance’s BNB and his now-defunct stablecoin, BUSD. The lawyers for FTX argue that the exchange was “certainly balance-sheet insolvent” when this transfer happened, which makes the agreement fraudulent.
FTX also claims that Zhao sent out “false, misleading, and fraudulent tweets” aimed at damaging the exchange just before it collapsed. Bankman-Fried mentioned similar accusations in a blog post after FTX’s downfall in January 2023.
A spokesperson for Binance responded, stating that FTX’s claims are “meritless” and that they are ready to defend themselves in court.
Currently, Bankman-Fried is serving a 25-year prison sentence. Caroline Ellison, a former CEO of FTX, is serving two years, while Ryan Salame, a former co-CEO of FTX Digital Markets, is facing a 7.5-year sentence.
Meanwhile, Gary Wang, co-founder and former CTO of FTX, is working with U.S. authorities. He’s helping develop tools to track illegal activities on cryptocurrency exchanges. His legal team is fighting to keep him out of prison.