Future Exchange (FTX), the bankrupt cryptocurrency exchange, has filed a lawsuit against Binance Holdings Ltd. and its former CEO Changpeng Zhao, seeking to recover nearly $1.8 billion in what it alleges was a fraudulent transaction orchestrated by FTX co-founder Sam Bankman-Fried.
The claim, detailed in a filing by the FTX estate, focuses on a share repurchase agreement from July 2021 in which FTX bought back Binance’s 20% stake in its international operations and 18.4% in its U.S.-based affiliate, West Realm Shires (WRS), through Alameda Research.
Binance initially acquired its stake in FTX in November 2019, investing 1,002,739 BNB tokens. In 2020, it expanded this investment to WRS for $2, strengthening its strategic hold. However, due to rising personal tensions between Zhao and Bankman-Fried, Binance decided to exit the investment by 2021.
The repurchase deal, valued at $1.76 billion, was reportedly funded through FTX’s native FTT token, BNB, and Binance’s stablecoin, BUSD.
FTX now contends that Alameda was insolvent at the time of the deal, making the transaction questionable. Caroline Ellison, former CEO of Alameda Research, testified that she had warned Bankman-Fried of insufficient funds, noting that roughly $1 billion of depositor funds from FTX ultimately financed the buyback.
Binance has denied the allegations, calling the claims “meritless” and asserting it will defend itself against the accusations. This suit adds a new layer to FTX’s attempts to reclaim assets in the aftermath of its collapse, as it seeks accountability for alleged mismanagement and questionable deals with major industry players.
