FTX sued Binance’s former CEO CZ for defrauding a $1.76B transaction

In the year In 2019, Binance acquired a 20% stake in the defunct FTX in 2021 in an agreement with Sam Bankman-Fried, Binance and FTX bought back the stake for $1.76 billion in FTT, BNB and BUSD. The transfer was made by Alameda Research, which was at a loss at the time and could not afford the transaction

FTX has filed a lawsuit against Binance and co-founder and former CEO Changpeng “CZ” Zhao to recover $1.76 billion in fraudulent transactions.

A November 10 filing alleges FTX co-founder Sam Bankman-Fried transferred “at least $1.76 billion” to Binance and Binance executives in July 2021.

In March, Bankman-Fried was sentenced to 25 years in prison for defrauding customers.

According to the filing, the transfer was part of a purchase agreement between Binance and FTX and should not have happened. The filing came in November 2019 when Binance acquired a 20% equity stake in FTX for over one million units of Binance's BNB token through an agreement with Bankman-Fried.

Around February 2020, Binance acquired 18.4% in WRS, the Bankman-Fried umbrella company in the US. However, in July 2021, the two parties agreed to a deal in which FTX would buy Binance and its executives their entire stake in FTX and WRS.

This has reached around $1.76 billion in FTX's FTT token, BNB and BUSD (Binance's stablecoin), backed by FTX's sister company Alameda Research.

I could not buy the transaction

According to the filing, the transfer was fraudulent because Alameda was bankrupt at the time and could not afford the transaction. According to former Alameda Research CEO Caroline Ellison, Alameda “used approximately $1 billion in FTX trading capital received from depositors for repurchase funds.”

In September, Ellison was sentenced to 24 months in prison for her role in the FTX collapse.

Following the repurchase, On November 6, 2022, Zhao claimed that he “sent out a series of false, misleading and deceptive tweets designed to destroy rival FTX, considering the potential harm to FTX's customers and creditors.”

As a result, “Zhao's false tweets caused a predictable breakout on FTX — a symbolic run on the bank that Zhao knew would cause FTX to collapse,” he said in the filing.