FTX sues Binance and CZ for nearly $1.8b over alleged SBF transfer

FTX is suing Binance Holdings and former Chief Executive Changpeng ‘CZ’ Zhao over alleged fraudulent share buybacks by Sam Bankman-Fried worth $1.76 billion at the time.

According to a Bloomberg report published on Nov. 11, CZ and other Binance executives received the funds as part of a share repurchase agreement with then-FTX CEO Sam Bankman-Fried in July 2021.

Bankman-Fried sold about 20% of FTX’s international unit shares and 18.4% from its U.S.-based subsidiary, according to regulatory filings. Bankman-Fried paid for the buyback with a mix of FTX’s token FTT and Binance-issued coins BSB(BSB) and BUSD(BUSD). The transaction was valued at approximately $1.76 billion at the time.

However, the FTX team claims that Bankman-Fried’s transfer to Binance was fraudulent. This is because FTX and its sister company Alameda Research were already “balance sheet insolvent” when the buyback deal with Binance went through. Therefore, they believe that the transfer was made fraudulently.

Not only that, but FTX is also going after CZ for posting a series of “false, misleading and fraudulent tweets” in the days leading up to the crypto exchange’s collapse. The site claimed that CZ’s posts were deliberately made to take down his opponent, stating that his content was “maliciously calculated to destroy his opponent.”

One such case occurred in November 2022, when CZ published a tweet claiming that Binance was planning to sell $529 million worth of FTT tokens. His tweet set off a flood of frightened investors withdrawing money from the stock market. Bloomberg requested comment to Binance, but a Binance spokesperson did not respond to the allegations.

Former Binance CEO CZ was released at the end of September after completing his four-month prison sentence. He attends cryptocurrency events and gives public interviews. Meanwhile, Sam Bankman-Fried has been serving a 25-year sentence in a federal prison facility since last year.

However, her new lawyer objected to the decision, claiming that the judge deemed Bankman-Fried guilty from the beginning.

In addition to Binance, FTX also filed approximately 23 lawsuits against former investors, affiliates, and customers in an attempt to retain creditors’ money. Plaintiffs include political groups such as former White House communications director Anthony Scaramucci and his hedge fund SkyBridge Capital, digital asset exchange Crypto.com and FWD.US.

Additionally, FTX’s sister hedge fund Alameda Research also filed a lawsuit against Waves founder Sasha Ivanov, seeking $90 million worth of cryptocurrency.