>>>>Binance Lawsuit<<<
The FTX bankruptcy estate is suing Binance (Binance Lawsuit) and Binance founder Changpeng ‘CZ’ Zhao for more than $1.8 billion in an attempt to recover a “fraudulent conveyance” of millions USD.
The estate claims that a large part buyback in July 2021, which cost FTX a sizable sum, was indeed fraudulent due to FTX being insolvent at the time.
The FTX estate has been embroiled in a series of legal struggles throughout its bankruptcy process, and this is just the newest.
Core of the Lawsuit : The Share Buyback Agreement in 2021
The complaint goes on to state that Sam Bankman-Fried, FTX co-founder, structured a stock buyback deal through Binance that cost $1.76 billion in crypto.
The court documents allege that 20% of FTX International and 18.4% of FTX US (now known as West Realm Shires Services) was bought back using a combination of the exchange’s native token (FTT), Binance’s token (BNB) and Binance USD (BUSD).
Now, the estate of FTX is arguing the opposite, claiming that these assets were fraudulently obtained — and well ahead of either firm declaring bankruptcy with claims FTX and its associated firms, including Alameda Research, were already insolvent back to 2021. It is for this reason, it argues, that the transaction with Binance in July 2021 was a fraudulent transfer.
Related News: From Binance’s Growth to FTX’s Legal Troubles: Key Crypto Developments
Binance’s Role in FTX’s Fall
But the complaint isn’t limited to the July 2021 deal.
Binance’s Zhao allegedly initiated a “scheme to destroy FTX,” spreading fear, uncertainty, and doubt (FUD) that harmed the public perception of FTX.
According to the lawsuit, this campaign ended with Binance selling off all its holdings in FTX’s native coin, the FTT token, in early November 2022, immediately before the collapse of the FTX exchange.
Zhao’s public statements during that period suggested that he wanted to “reduce market impact” in liquidating FTT positions by Binance. The FTX estate does not appear to agree with that assessment.
Zhao’s conduct is said to have been intended to “maximize market impact,” with the result that the price of FTT plummeted, which “is to be expected and already led to a cascade of FTX falling, and [at the same time] entrenched the position of Binance in the market.
Misleading Statements & False Company Acquisition Claims
It also goes into detail about an important timeline when Zhao announced plans to buy FTX as the exchange was facing liquidity issues.
His statements to the media and letter of intent to buy FTX, they allege, left the impression that Binance was performing due diligence.
This, the lawsuit alleges, prohibited FTX from exploring other sources of funding, which ultimately worsened the financial problems at FTX and hurt its creditors.
The estate alleges these comments from Binance were intentionally misleading, with the goal of intentionally weakening FTX instead of an earnest effort to explore acquisition options.
The filing claims that Binance and Zhao conspired to manipulate public opinion, asserting that Zhao’s tweets related to the acquisition did not reflect any genuine intention to consummate the acquisition.
Rather, the suit claims, Binance’s public declarations of interest were a tactic to destabilize FTX even further—and to make sure it couldn’t raise the capital needed to survive.
Ripple Effects of the FTX Estate’s Legal Battle
This case is merely one of the most recent actions taken against Binance by the FTX estate.
Only a few days earlier, on November 9, the estate sued SkyBridge Capital and its founder, Anthony Scaramucci, to recover more than $100 million Bankman-Fried had paid for sponsorship and investment agreements.
Likewise, at the end of October, Alameda Research — a sister company of FTX — also filed a complaint against crypto exchange KuCoin to recover more than $50 million in assets locked on the platform.
The lawsuits are related to the FTX estate’s wider game plan of reclaiming as much money as it can for FTX’s creditors.
The estate has repeatedly claimed that Bankman-Fried was involved in an elaborate scheme in the lead-up to the collapse of FTX, with speculative trades, alleged siphoning of customer cash, and potential fraud with industry partners as part of it.
What Now for the Binance-FTX Legal Battle?
Depending on how the courts interpret FTX’s collapse and Binance’s role in their demise, the case may have a material impact on Binance and the wider crypto space. Depending on how the suit ultimately plays out, this could also take a pretty significant form in terms of the future structure of crypto transactions and partnerships—especially if market manipulation or bad faith transfer evidence comes to light in court.
From FTX bankruptcy estate claiming $1.8B from Binance to $100m from SkyBridge Capital—and more—it seems like FTX lawyers are going for maximal creditor returns.
Although the complete financial and regulatory fallout from FTX’s collapse is still playing out, these suits reveal the legal uncertainties and money dangers related to the fast growth of the cryptocurrency world.
