Defunct FTX sues Binance, former CEO for fraud

Nov. 11 (UPI) - The estate of the crippled digital exchange FTX filed a lawsuit against fellow crypto exchange Binance on Sunday as it tries to get back $1.76 billion in what it claims was a "fraudulent" share agreement.

FTX charged in Delaware court that in a 2021 deal, Binance and its then-CEO Changpeng Zhao, who is also named in the lawsuit, left 20% of their investment in FTX, selling it back to FTX, which was funded by FTX's Alameda Research Division.

It said Alameda, in a deal that was agreed to by embattled FTX CEO Sam Bankman-Fried, did not have the funds to cover the transaction at the time.

"Alameda was insolvent at the time of the share repurchase and could not afford to afford the transaction," the lawsuit claimed. It also blamed Bankman-Fried for the "constructive fraudulent transfer."

The court document said Bankman-Fried, who is serving 25 years in prison in connection with the failure of FTX, paid for the repurchase by stitching together a brew of FTX change token FTT and Binance-branded coins BNB and BUSD.

The lawsuit then charged that Zhao issued "false, misleading, and fraudulent tweets," publicly before FTX folded, meant to "maliciously calculated to destroy his rival."

Binance and Zhao have rejected the charges.

"The claims are meritless, and we will vigorously defend ourselves," a Binance spokesperson told Bloomberg.