Bankrupt crypto exchange FTX has taken legal action against Binance and its co-founder Changpeng Zhao, seeking to recover $1.76 billion that was allegedly fraudulently transferred.
According to the lawsuit, at least $1.76 billion in cryptocurrencies were transferred from FTX to Binance and certain Binance executives in July 2021 as a share buyback, which was deemed a "constructive fraudulent transfer."
The filing also alleged that Binance initially acquired a 20% stake in FTX.com in November 2019 through a deal with Sam Bankman-Fried, with more than one million BNB tokens exchanged.
In 2020, Binance executives allegedly acquired an additional 18.4% stake in WRS, a company under Bankman-Fried's US-based crypto entities.
The lawsuit further claimed FTX and Binance entered into negotiations in 2021 for FTX to repurchase shares previously acquired by Binance and its executives for $1.76 billion in FTX's native exchange token FTT, BNB and BUSD.
However, the filing claimed this transaction was conducted fraudulently, as FTX's sister company, Alameda, was already insolvent and unable to fund it.