FTX Files $1.8 Billion Lawsuit Against Binance and Former CEO Changpeng Zhao

FTX has filed a lawsuit against Binance Holdings and its former CEO Changpeng Zhao, seeking to recover nearly $1.8 billion (approximately Rs. 15,189 crore) that the company alleges was fraudulently transferred. The legal action stems from a July 2021 share repurchase deal orchestrated by Sam Bankman-Fried, the now-imprisoned co-founder of FTX. This lawsuit marks the latest effort by FTX to reclaim funds amid its ongoing bankruptcy proceedings.

According to the filing from the FTX estate, the transaction involved Binance, Zhao, and other Binance executives selling their stakes in FTX’s international and US-based entities. These stakes amounted to about 20 percent in FTX’s global operations and 18.4 percent in its US division. The payment for the repurchase was made using a mix of cryptocurrency assets, including FTX’s native token, FTT, as well as Binance-branded coins BNB and BUSD, valued at approximately $1.76 billion (roughly Rs. 14,852 crore) at the time.

FTX’s lawsuit alleges that the transaction was carried out using funds that were not rightfully Bankman-Fried’s to use, claiming that they were misappropriated from FTX customer deposits. These allegations echo broader accusations of financial misconduct against Bankman-Fried, who has faced extensive legal scrutiny since FTX’s collapse. The case underscores the complex web of financial relationships between FTX and Binance, two of the largest players in the cryptocurrency industry before FTX’s downfall.

Binance has yet to issue a formal response to the lawsuit. However, the case is likely to intensify scrutiny on both companies and their executives, raising questions about corporate governance and fund management practices in the cryptocurrency sector. For FTX, recovering the disputed funds is crucial as it works to compensate creditors and navigate its way through bankruptcy proceedings.