Richard Parks FTX has initiated legal action against Binance Holdings and its former CEO, Changpeng “CZ” Zhao, over an allegedly fraudulent $1.76 billion share buyback led by FTX’s founder, Sam Bankman-Fried. According to a November 11 Bloomberg report, the lawsuit claims that CZ and Binance executives received these funds in a July 2021 transaction that FTX now deems improper.
The lawsuit outlines that Bankman-Fried repurchased Binance’s share in FTX’s global and U.S. divisions, using a mix of FTX’s FTT tokens along with Binance’s BNB and BUSD tokens. FTX claims that when the transaction took place, both FTX and its sister firm, Alameda Research, were insolvent, making the transfer fraudulent.
FTX also accuses CZ of making misleading public statements to damage FTX’s reputation, including a November 2022 tweet in which CZ announced Binance’s intention to sell $529 million of FTT tokens. This announcement reportedly spooked investors, causing mass withdrawals from FTX and accelerating its financial collapse. FTX’s legal team argues that CZ’s posts were “maliciously calculated” to harm FTX’s business.
When reached by Bloomberg for comment, Binance did not provide a response.
Since his recent release from a four-month prison sentence, CZ has been active in the cryptocurrency space, participating in industry events and interviews. Meanwhile, Bankman-Fried, currently serving a 25-year prison sentence, is appealing his conviction, with his legal team arguing that the judge held a bias against him.
This lawsuit is part of FTX’s broader effort to recover assets for creditors. The company has filed similar cases against high-profile investors, partners, and affiliates, including Anthony Scaramucci’s hedge fund, SkyBridge Capital, the digital-asset exchange Crypto.com, and political group FWD.US.
In addition, FTX’s affiliate, Alameda Research, has launched its own suit against Waves founder Sasha Ivanov, seeking $90 million in cryptocurrency holdings.