FTX Sues Crypto Exchange Binance and Its Former CEO Zhao For $1.8 Billion

The FTX estate has filed a lawsuit against Binance and former CEO Changpeng Zhao, seeking to recover $1.76 billion, alleging a 'fraudulent' 2021 share deal that involved funding from FTX's insolvent Alameda Research. The suit also accuses Zhao of misleading social media posts that allegedly spurred customer withdrawals and contributed to FTX's collapse. CNBC reports: In a Sunday filing with a Delaware court, FTX cites a 2021 transaction in which Binance, Zhao and others exited their investment in FTX, selling a 20% stake in the platform and a 18.4% stake in its U.S.-based entity West Realm Shires back to the company. The FTX estate alleges that the share repurchase was funded by FTX's Alameda Research division through a combination of the company's and Binance's exchange tokens, as well as Binance's dollar-pegged stablecoin.

'Alameda was insolvent at the time of the share repurchase and could not afford to fund the transaction,' the suit claims, labeling the deal agreed with FTX co-founder Sam Bankman-Fried -- who's now serving a 25-year sentence over fraud linked to the downfall of his exchange -- a 'constructive fraudulent transfer.' Binance denies the allegations, saying in an emailed statement, 'The claims are meritless, and we will vigorously defend ourselves.'

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