- In 2019, Binance acquired a 20% stake in collapsed FTX in a cope with Sam Bankman-Fried
- In 2021, Binance and FTX agreed to a deal that noticed FTX shopping for again the stake, amounting to $1.76bn in FTT, BNB, and BUSD
- The switch was carried out by Alameda Analysis, which was bancrupt on the time and couldn’t afford the transaction
FTX has filed a lawsuit in opposition to Binance and its co-founder and former CEO Changpeng “CZ” Zhao to reclaim $1.76 billion over an alleged fraudulent switch.
A submitting from November 10 acknowledged that Sam Bankman-Fried, FTX’s co-founder, fraudulently transferred “at the least $1.76 billion” to Binance and Binance executives in July 2021.
In March, Bankman-Fried was sentenced to 25 years in jail for defrauding prospects.
Based on the submitting, the switch was a part of a repurchase deal between Binance and FTX and shouldn’t have occurred. The submitting claims that in November 2019, Binance acquired a 20% fairness stake in FTX with over a million in Binance’s BNB token in a cope with Bankman-Fried.
Round February 2020, Binance acquired an extra 18.4% in WRS, an umbrella firm of Bankman-Fried based mostly within the US. Nonetheless, in July 2021, the 2 events agreed on a deal that noticed FTX purchase again Binance and its executives’ total stakes in FTX and WRS.
This amounted to round $1.76 billion in FTX’s FTT token, BNB, and BUSD (Binance’s stablecoin), which was funded by FTX’s sister firm Alameda Analysis.
Couldn’t afford the transaction
Per the submitting, the switch was fraudulent as a result of Alameda was bancrupt on the time and couldn’t afford the transaction. Based on testimony from Caroline Ellison, former CEO of Alameda Analysis, Alameda spent round “$1 billion of FTX Buying and selling’s capital obtained from depositors to fund the repurchase.”
In September, Ellison was sentenced to 24 months in jail for her function within the collapse of FTX.
Following the repurchase, on November 6, 2022, Zhao is claimed to have “despatched a sequence of false, deceptive, and fraudulent tweets that have been maliciously calculated to destroy his rival FTX, with reckless disregard to the hurt that FTX’s prospects and collectors would undergo.”
Because of this, “Zhao’s false tweets triggered a predictable avalanche of withdrawals at FTX – the proverbial run on the financial institution that Zhao knew would trigger FTX to break down,” based on the submitting.
