11.11.2024
Anastasiia Chabaniuk
Author, Financial Expert at Traders Union
11.11.2024

FTX sues Binance for $1.76 billion alleging fraudulent transfer in stock buyback

FTX sues Binance for $1.76 billion alleging fraudulent transfer in stock buyback Binance faces $1.76 billion lawsuit from Ftx over alleged constructive fraudulent transfer

​FTX has filed a lawsuit against Binance and its co-founder Changpeng Zhao (CZ), seeking to recover $1.76 billion that FTX claims was fraudulently transferred. 

The suit alleges that a July 2021 transaction in which FTX repurchased its shares from Binance was a “constructive fraudulent transfer.” According to the filing, FTX transferred the funds to Binance as part of a share buyback while FTX’s sister company, Alameda Research, was insolvent, reports The Block.

Alleged Fraudulent Transactions and Stake Acquisition

In November 2019, Binance acquired a 20% stake in FTX by purchasing over one million Binance (BNB) tokens, a deal executed with FTX co-founder Sam Bankman-Fried. Binance executives later acquired an 18.4% stake in WRS, an umbrella company for Bankman-Fried’s U.S.-based crypto entities. In 2021, FTX repurchased the shares from Binance and its executives for $1.76 billion in FTT, BNB, and BUSD. The lawsuit claims that this buyback transaction was fraudulently funded by FTX customer deposits, as Alameda Research, which facilitated the repurchase, was already financially insolvent.

Accusations Against Changpeng Zhao and Binance’s Response

The lawsuit also accuses CZ of orchestrating a “bank run” on FTX by posting misleading tweets, which allegedly triggered mass withdrawals, leading to FTX’s collapse. In November 2022, CZ tweeted that Binance would sell off its FTT holdings, putting significant selling pressure on FTX’s native token, FTT. According to FTX’s filing, CZ’s statements were strategically aimed at destabilizing FTX to the detriment of its customers and creditors. Binance, however, has dismissed these allegations as “meritless” and vowed to “vigorously defend” against them.

This lawsuit adds to the FTX estate’s ongoing efforts to recover billions lost in its collapse, with over 20 lawsuits recently filed against former executives, investors, and other entities, including notable figures like SkyBridge Capital CEO Anthony Scaramucci and Deltec Bank chairman Jean Chalopin. 

Recently we wrote, that FTX is trying to recover over $1 billion in funds lost due to Sam Bankman-Fried's excessive generosity and fraudulent actions.

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