The FTX bankruptcy estate continues to pursue litigation against cryptocurrency firms amid its bankruptcy proceedings. In a new lawsuit, a group of companies involved in the FTX case filed a complaint against Binance, seeking to recover $1.8 billion. The complaint was filed on November 10.
FTX Alleges Fraudulent Transfer
According to the filing, the plaintiffs argue that Binance, former CEO Changpeng Zhao, popularly known as CZ, and other executives at the exchange received at least $1.76 billion in a fraudulent transfer from FTX. This transfer occurred through Binance's 2021 stock repurchase agreement with Sam Bankman-Fried, co-founder of FTX, who is currently serving a 25-year prison sentence.
The transaction in question saw Bankman-Fried sell approximately 20% of FTX International and 18.4% of West Realm Shires Services, also known as FTX US, to Binance.
Bankman-Fried financed the buyback with FTX's native cryptocurrency, FTT, alongside Binance-operated tokens BNB and BUSD, which held a combined value of $1.76 billion at the time of transfer.
FTX filed a $1.76 bn lawsuit against BinanceNov 21: Binance acquired 20% stake in FTX in Nov 2019 for $18.3mJul 21: FTX bought back stake which was a constructive fraudulent transfer as FTX was insolvent pic.twitter.com/SPpRSAYKl9
— Sunil (FTX Creditor Champion) (@sunil_trades) November 11, 2024
Alleged Insolvency Linked to Deal
The FTX estate alleges in the complaint that both FTX and its sister company Alameda Research “may have been insolvent from inception,” with balance-sheet insolvency established by early 2021. Given the alleged insolvency, the estate claims the stock repurchase constitutes a fraudulent transaction.
Meanwhile, Zhao was released from US custody in late September after serving a four-month sentence. In a recent interview with Bloomberg, he stated that he is receiving offers to sell his controlling stake in Binance.
However, Zhao did not disclose the identities of the interested buyers. Zhao, who founded Binance in 2017, holds a 90% stake in the exchange, as reported by Finance Magnates. His net worth is estimated at $61 billion, making him the richest crypto billionaire.
This article was written by Tareq Sikder at www.financemagnates.com.
You can get bonuses upto $100 FREE BONUS when you:
💰 Install these recommended apps:
💲 SocialGood - 100% Crypto Back on Everyday Shopping
💲 xPortal - The DeFi For The Next Billion
💲 CryptoTab Browser - Lightweight, fast, and ready to mine!
💰 Register on these recommended exchanges:
🟡 Binance🟡 Bitfinex🟡 Bitmart🟡 Bittrex🟡 Bitget
🟡 CoinEx🟡 Crypto.com🟡 Gate.io🟡 Huobi🟡 Kucoin.
Comments