Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Collapsed crypto exchange FTX is suing Binance and its former chief executive Changpeng Zhao for $1.8bn, over an allegedly “fraudulent” share deal.
The dispute relates to a July 2021 deal in which Binance, Zhao and other executives sold their roughly 20 per cent stake in FTX back to the company in exchange for crypto tokens valued at $1.76bn.
The transaction, part of a repurchase deal agreed with founder Sam Bankman-Fried, should not have taken place, according to the lawsuit, which seeks to claw back the tokens for the FTX bankruptcy estate.
In a lawsuit filed in Delaware on Sunday, the administrators of the FTX estate said that the exchange and its sister trading house Alameda Research “may have been insolvent from inception and certainly were balance-sheet insolvent by early 2021”, and so the deal should not have been allowed to proceed.
The transfer of cryptocurrency to Binance and some executives at the company “was a constructive fraudulent transaction”, the lawsuit said.
Bankman-Fried is in prison, having earlier this year been sentenced to 25 years for fraud. Zhao stepped down from Binance in April and spent four months in jail after pleading guilty to failing to establish adequate money laundering controls.
The dispute marks the latest chapter in the tensions between two of the biggest crypto exchanges in the world, as FTX seeks to repay its debts following its dramatic collapse in 2022, which sparked a crash in the price of crypto tokens and pushed other companies into bankruptcy.
“The claims are meritless, and we will vigorously defend ourselves,” Binance said in a statement. Zhao did not immediately respond to a request for comment.
Read the full article here
