Close Menu
    News

    FTX sues Binance and former CEO Changpeng Zhao for alleged fraudulent share repurchase

    By No Comments2 Mins Read

    30s Summary

    Bankrupt crypto exchange FTX is suing Binance and ex-Binance CEO Changpeng “CZ” Zhao over alleged fraudulent repurchase of shares. FTX’s former CEO Sam Bankman-Fried’s trading firm, Alameda Research, is said to have financed the buy-back using FTX and Binance tokens, despite being bankrupt. The lawsuit claims the transaction as fraudulent as these tokens were deemed worthless due to FTX’s insolvency. FTX also accuses Binance and Zhao of selling a large quantity of their FTT tokens, resulting in a significant devaluation, and alleges Zhao circulated misleading information about FTX on Twitter to impact the exchange’s recoverable value.

    Full Article

    FTX, the bankrupt crypto exchange, is suing Binance and former Binance CEO, Changpeng “CZ” Zhao. The lawsuit is over an alleged fraudulent buy-back of shares by FTX’s ex-CEO, Sam Bankman-Fried. Supposedly, Bankman-Fried’s trading firm, Alameda Research, financed the re-purchase. Yet, Alameda was bankrupt at the time and didn’t appear to have the funds for the transaction, according to a court case.

    The deal to buy Binance and Zhao’s stake in FTX used crypto tokens. In particular, these were FTX’s native token, FTT, and Binance’s BSB and BUSD tokens, all of which added up to roughly $1.76 billion at the time.

    The lawsuit claims FTX was already insolvent and the FTT tokens were worthless when the transaction happened. Consequently, the transfer could be considered fraudulent. FTX went bankrupt in November 2022 after CoinDesk revealed balance sheet discrepancies between the exchange and Alameda. Sam Bankman-Fried, the former FTX CEO, was sentenced for lots of counts of fraud and will serve 25 years.

    FTX claims that Binance and Zhao worsened FTX’s situation by selling a major amount of their FTT tokens which caused a massive drop in the token’s value. Moreover, the filing suggests that Zhao was trying to harm his competitor by tweeting misleading information about FTX, impacting the value that could have been recovered by FTX’s stakeholders.

    No commentary from Binance on the situation yet.

    Related Posts