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FTX has taken Binance and its founder Changpeng Zhao to court, filing a $1.8 billion lawsuit over allegations of fraudulent transfers linked to a 2021 share deal. The filing also claims Zhao's statements pushed FTX into a liquidity crisis, sparking its financial unraveling.
FTX Alleges $1.8 Billion Fraudulent Transfer to Binance and Changpeng Zhao
In July 2021, the exchange and Changpeng Zhao (CZ) allegedly got the $1.8 billion as per a Bloomberg story detailing FTX's allegations.
Using a mix of FTT, BNB, and BUSD, Sam Bankman-Fried, also known as SBF, allegedly repurchased about 20% of the FTX international unit and 18.4% of the US-based corporation in this transaction.
FTX Claims Financial Instability Was Present from Early 2021
According to the research, these assets were worth about $1.76 billion when it was written. The now-defunct exchange claims in its petition that it and its sister company, Alameda Research, may have had financial issues from the start and were probably bankrupt by the beginning of 2021.
Given this, the FTX estate contends that the share repurchase agreement was deceitful and ought to be nullified in order to retrieve the remitted monies. To add insult to injury, it claims that CZ made false claims in the lead-up to FTX's demise.
Zhao’s November 2022 Tweet Sparks Liquidity Crisis
The $529 million worth of FTT holdings that the exchange planned to sell were announced by Zhao on Twitter in November 2022. A liquidity crisis ensued as a result of this news, which caused large-scale withdrawals from the now-defunct exchange.
The petition claims that the purpose of these statements was to cause financial instability at FTX, Coingape explains.
FTX Broadens Legal Strategy in Delaware Bankruptcy Court
The litigation initiated by FTX in the bankruptcy court of Delaware includes the charges levied against Binance and Zhao. The now-defunct exchange, for context, recently went to court again, this time accusing Chinese citizens of participating in massive amounts of money laundering.
The article states that the exchange asserted that twenty-six unknown users and twenty-six Chinese users had used the site to launder billions of dollars. It went on to say that during that crucial 90 days, the people in question had removed $468 million worth of cash and cryptocurrency.
Case Gains Attention as Binance Faces Multiple Legal Challenges
As the former chief executive officer of the leading cryptocurrency exchange recently commented on FTX, the case against CZ has also garnered attention. Additionally, it follows the filing of motions to dismiss the Binance SEC complaint, which sparked market debates, shortly after.
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