FTX Files $1.8 Billion Lawsuit Against Binance

Amid a dramatic collapse, the cryptocurrency company FTX has initiated legal proceedings against Binance and the exchange's former CEO Changpeng Zhao. In a lawsuit filed in Delaware on Sunday, FTX is seeking the recovery of at least $1.8 billion, which it claims was fraudulently transferred to Binance and its executives to the detriment of creditors.

The lawsuit stems from a transaction that occurred in July 2021, during which Binance sold its stake back to FTX. FTX's Alameda Research division financed the buyback with tokens valued at $1.76 billion at the time. The suit alleges that Alameda did not have the payment ability when it repurchased the shares, and that this transaction should not have been allowed to occur.

FTX's liquidators are seeking compensation and punitive damages in an amount to be determined by the court. In response to the lawsuit, a spokesperson for Binance dismissed the claims as baseless, stating that the company will mount a strong defense.

Once a leading player in the cryptocurrency market, FTX faced financial issues and declared bankruptcy at the end of 2022. Under Zhao's leadership, Binance initially considered purchasing FTX's non-U.S. operations to assist the troubled company but later retracted its offer.

In a related news item, FTX founder Sam Bankman-Fried was sentenced to 25 years in prison in March for embezzling $8 billion from customers. Bankman-Fried later appealed his conviction. Zhao, known as "CZ", also faced legal repercussions, receiving a four-month prison sentence earlier this year after admitting to violating U.S. anti-money laundering regulations at Binance, the world's largest cryptocurrency exchange. Zhao could not be immediately reached for comment regarding the latest lawsuit.