FTX Sues Binance and CZ, Demanding Compensation of Up to $1.76 Billion

At a time when Bitcoin is continuously reaching new all-time highs, a sensational lawsuit has emerged as FTX—the infamous collapsed cryptocurrency exchange—has filed a suit against Binance Holdings Ltd. and former CEO Changpeng Zhao (CZ). This information was disclosed by Sunil Kavuri, a representative of FTX’s largest creditor group. The claimed compensation amounts to $1.76 billion, alleged to be funds unlawfully transferred by Sam Bankman-Fried (SBF).

In the lawsuit, FTX specifies that Binance, CZ, and Binance’s leadership played a central role in the downfall of the FTX empire. The story traces back to November 2019, when Binance invested $18.3 million to acquire a 20% stake in FTX. By July 2021, SBF had repurchased all these shares for $1.76 billion, paid in FTT, BNB, and BUSD tokens. This transaction included Binance’s exit from both FTX International (20%) and FTX.US (18.4%).

Notably, of the funds SBF used to buy back shares, up to $1 billion (accounting for 60%) was reportedly customer funds held at FTX. At that time, financial reports from Alameda Research—FTX’s “sister” company—revealed a concerning reality: while total assets stood at only $2.7 billion, liabilities reached $9.4 billion.

FTX claims that SBF’s “reckless spending” decision to pay $1.76 billion to repurchase shares from Binance was the spark that caused the exchange to lose liquidity and go bankrupt just a year later. Furthermore, FTX accuses CZ of engaging in actions aimed at “intentionally eliminating a competitor” by posting several tweets on the X platform that damaged FTX’s reputation right before its collapse. In particular, CZ’s tweet on November 6, 2022, announcing that Binance would sell its entire holding of FTT tokens worth $529 million, triggered a massive wave of withdrawals from FTX.

Related: Changpeng Zhao Perspective on FTX Two Years After Its Collapse

This lawsuit is only one among a series of lawsuits that FTX has filed in Delaware Bankruptcy Court to recover assets for debt repayment. Other defendants include former White House Communications Director Anthony Scaramucci, the exchange Crypto.com, and political organizations such as FWD.US, founded by Mark Zuckerberg.