11 November 2024 , 18:22
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Collapsed crypto hedge fund FTX has launched legal action against the largest cryptocurrency exchange Binance, seeking the return of almost $1.8bn (£1.4bn) allegedly transferred fraudulently.
FTX made headlines after the fraud perpetrated by founder Sam Bankman-Fried was revealed in 2022, causing the billion-dollar company to collapse.
Bankman-Fried was arrested and faced a trial in New York between October and November 2023. The jury convicted him on all seven charges including wire fraud and conspiracy to commit money laundering.
In March, he was sentenced to 25 years in federal prison.
Now according to press reports, the collapsed exchange is suing Binance and its former chief executive Changpeng Zhao.
The lawsuit filed in Delaware is linked to a July 2021 deal in which Binance and Zhao sold their about 20 per cent stake in FTX back to the company in exchange for crypto tokens valued at $1.76bn.
The lawsuit alleges that this deal with Bankman-Fried should not have happened, and the company seeks to take back the tokens for the FTX bankruptcy estate.
The lawsuit also accused Zhao of posting a series of “false, misleading, and fraudulent tweets” shortly before FTX’s collapse, the content of which was “maliciously calculated to destroy his rival.”
The famous tweet, Zhao stated on 6 November 2022 that Binance intended to liquidate any remaining FTT tokens, which caused withdrawals from the exchange to skyrocket.
Zhao stepped down from Binance in November 2023 after pleading guilty to a money laundering charge resulting in four months in federal prison.
This lawsuit comes as FTX has recently filed over 20 different lawsuits as part of the bankrupt company’s effort to return money for creditors. One of those is against the former White House communications director Anthony Scaramucci and his hedge fund SkyBridge Capital.