FTX accused Changpeng Zhao of withdrawing from an acquisition agreement and making misleading statements in order to incite a bank run.
In order to optimize asset recovery for creditors, FTX has initiated a succession of litigation against Binance as part of its ongoing bankruptcy proceedings.
FTX most recently filed a lawsuit against the crypto exchange on Nov. 10 in an effort to reclaim nearly $1.8 billion that it claims was fraudulently transferred by Sam Bankman-Fried.
FTX alleges in the filing that Binance engaged in fraudulent activities that undermined its financial stability and credibility. The lawsuit alleges that a fraudulent transfer from FTX resulted in Binance, former CEO Changpeng “CZ” Zhao, and other executives receiving a minimum of $1.76 billion in cryptocurrency.
The 2021 share purchase agreement between Binance and FTX, which the latter now claims was fraudulent due to its insolvency at the time, was the subject of the transaction. Bankman-Fried funded the repurchase with a combination of FTX’s token, FTT, and Binance’s BNB and BUSD, which were valued at $1.76b, according to legal documents.
Despite being aware of its insufficient liquidity and resources, Alameda is reportedly utilizing approximately $1 billion in customer deposits from FTX for the transaction. The lawsuit alleges that this was a deliberate strategy to deceive the market into believing that FTX and Alameda were financially secure, when in fact, both were insolvent.
A spokesperson for Binance stated that the exchange would defend itself against the “meritless” claims. Zhao did not respond to Cryptonews’ request for comment by the time of publication.
FTX also accused Zhao of intentionally undermining its operations by disseminating false statements. It asserts that these actions resulted in a bank run and prevented FTX from obtaining alternative financing.
A bank run at FTX and a surge in withdrawals were allegedly the result of Zhao’s tweet on Nov. 6, which disclosed Binance’s intention to liquidate its FTT holdings. It contended that Zhao’s actions were intended to impede FTX’s funding efforts and cause injury.
Binance initially consented to a non-binding acquisition; however, it promptly withdrew from the agreement. This action exacerbated market panic and, as per the legal documents, ultimately resulted in the financial collapse of FTX.
FTX has initiated more than 20 legal actions in the Delaware bankruptcy court, with a focus on a diverse array of former investors, affiliates, and clients.
Anthony Scaramucci, the former White House communications officer, is among the prominent defendants named in the lawsuits. Additionally, the lawsuits name the crypto exchange Crypto.com and political advocacy groups like FWD.US, which Zuckerberg founded.
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