FTX is suing Binance and its former CEO, Changpeng Zhao, for $1.8 billion, accusing them of engaging in a fraudulent share deal in July 2021.
The lawsuit claims that Binance, Zhao and other executives sold their 20 percent stake in FTX back to the company in a repurchase deal in exchange for crypto tokens worth $1.76 billion. The lawsuit said the deal was funded by customer deposits.
FTX argued that the deal should never have happened as the exchange, along with its sister company Alameda Research, was “insolvent” by early 2021, according to the Financial Times,
In a lawsuit filed in Delaware on Sunday, the administrators of the FTX estate said it “may have been insolvent from inception and certainly were balance-sheet insolvent by early 2021.”
The lawsuit suggested that the customer funds were used to conceal FTX’s financial troubles and mislead the market.
The case is part of ongoing legal efforts by the FTX estate to recover billions of dollars lost in its collapse.
Caroline Ellison, the CEO of Alameda Research, once said that a Tweet by Zhao “contributed” to FTX’s collapse.
Binance has had a turbulent 2024. Earlier this year, a hacker claimed access to user data along with Coinbase through KodexGlobal.
Binance faced stiff competition from Solana, the fifth largest cryptocurrency by market cap, nearing it’s market cap of $88.3 billion.
Other parties, including SkyBridge Capital and Huobi, are also facing legal action from FTX’s estate.
FTX founder Sam Bankman-Fried was sentenced to 25 years in prison for fraud, while Binance was slapped with $4 million in fines for money laundering violations by Canadian regulators.
Binance continues to deny money laundering allegations.
The cryptocurrency market, which includes altcoins and Bitcoin, has surged in value due to Donald Trump’s Election Day victory–just like the prediction market and Polymarket.
