Key Takeaways:
- The FTX bankruptcy estate has filed a $1.8 billion lawsuit against Binance and former CEO Changpeng “CZ” Zhao, alleging a fraudulent transfer.
- FTX claims the 2021 repurchase of Binance’s FTX stakes was funded through insolvent assets, including FTT tokens, BNB, and BUSD.
- The estate asserts that both FTX and Alameda Research were likely insolvent as early as 2021, positioning the transaction as potentially illegal under bankruptcy law.
The FTX bankruptcy estate has filed a $1.8 billion lawsuit against Binance and its former CEO, Changpeng “CZ” Zhao, as part of its efforts to reclaim funds.
Filed on November 10, the suit alleges that a 2021 deal where FTX co-founder Sam Bankman-Fried repurchased Binance’s 20% stake in FTX International and 18.4% stake in FTX US was a fraudulent transfer.
FTX files a lawsuit against Binance and its former CEO Changpeng Zhao, seeking to claw back almost $1.8 billion it alleges was fraudulently transferred by Sam Bankman-Fried https://t.co/sZV7AbgM3V
— Bloomberg (@business) November 11, 2024
According to the complaint, FTX financed the deal using a mix of its native FTT tokens and Binance-issued assets (BNB and BUSD) valued at approximately $1.76 billion at the time.
The FTX estate asserts that both FTX and its trading arm, Alameda Research, may have been insolvent from the beginning and were certainly under financial distress by early 2021, making the transaction voidable under bankruptcy law.
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