FTX Initiates $1.8 Billion Lawsuit Against Binance and Former CEO Zhao

The defunct cryptocurrency exchange, FTX, has taken legal action against Binance and its ex-CEO, Changpeng Zhao, in an effort to reclaim an estimated $1.76 billion. This complaint focuses on what FTX describes as a 'fraudulent' transaction involving company shares.

Filed recently in a Delaware court, the lawsuit points to a 2021 deal where Binance, Zhao, and others divested their investment in FTX. They sold back to the company a 20% ownership share in FTX and an 18.4% stake in its U.S. division, West Realm Shires.

According to FTX’s estate, the money for the stock buyback was sourced through FTX's Alameda Research unit. This was allegedly managed by a mix of digital coins from both FTX and Binance, alongside Binance’s stablecoin, tethered to the U.S. dollar.

The suit argues that Alameda was financially dysfunctional at the time, incapable of legitimately supporting the buyback deal. This transaction, agreed with FTX co-founder Sam Bankman-Fried—currently imprisoned for fraud associated with the exchange's downfall—is termed a 'constructive fraudulent transfer.'

Inquiries for comments have been sent to Binance.

This lawsuit underscores the ongoing friction between two titans of the cryptocurrency sector, following the dramatic implosion of FTX that sent shockwaves through the market.