FTX Sues Binance Founder CZ For Fraudulent Behavior $1.8B Funding

Key Points:

• FTX is suing Binance founder CZ and the exchange to recover nearly $1.8 billion, alleging fraudulent transfers linked to a 2021 share repurchase deal.
• The lawsuit accuses Zhao of posting misleading tweets that triggered a spike in FTX withdrawals, worsening the company’s financial collapse.

According to Bloomberg, FTX has filed a lawsuit in Delaware bankruptcy court against Binance founder CZ (Changpeng Zhao) and the exchange in an attempt to claw back nearly $1.8 billion that it said FTX's own co-founder, Sam Bankman-Fried, transferred fraudulently to the controlling shareholder of the two companies.

FTX Sues Binance for $1.8 Billion Over Alleged Fraudulent Transfers

Binance Founder CZ Accused of Market Manipulation Leading to FTX's Collapse

The lawsuit also claims that Zhao's social media activity brought down FTX. In a tweet dated November 6, 2022, CZ announced that the exchange was selling its FTT tokens, which then had a market value of about $529 million.

This announcement allegedly triggered an increase in the number of FTX withdrawals and hastened the exchange's collapse. According to FTX's estate, Binance founder CZ has been spreading false information due to malice, aiming to bring down his competitor.

The lawsuit is part of the broader effort by FTX to recover assets from one-time investors and partners as it tries to sort through billions of dollars in bankruptcy claims. Among other defendants are Crypto.com, Anthony Scaramucci, the onetime White House communications director, and FWD.US, a political advocacy group founded by Mark Zuckerberg.