Co-founder Of Binance Sued

Changpeng Zhao, the co-founder and former CEO of crypto exchange Binance, is facing new legal troubles despite his recent release from prison. FTX, the collapsed crypto exchange founded by Sam Bankman-Fried, has sued Zhao and Binance over a $1.76 billion stock repurchase, claiming that the funds were fraudulently transferred.

The lawsuit alleges that FTX and its affiliated hedge fund Alameda Research were “balance-sheet insolvent” when the deal was made in June 2021. This means that FTX didn’t have the financial stability to make the transaction, and Binance should have known better than to accept the funds.

The history between Binance and FTX is complicated, to say the least. Zhao was one of the first to question the value of FTX-issued tokens, sparking a selloff and scrutiny of its finances. It was later revealed that Bankman-Fried and his employees were secretly moving money between FTX and Alameda Research, leading to Bankman-Fried’s 25-year prison sentence for multiple counts of fraud.

As part of the deal, Sam Bankman-Fried, FTX’s co-founder, sold approximately 20% stake in FTX’s international unit and 18.4% in its US-based entity, valued at $1.76 billion at the time of the transaction ² ³. The lawsuit also accuses CZ of posting misleading tweets that contributed to FTX’s collapse, including a tweet announcing Binance’s intention to sell its FTT tokens, worth $529 million at the time.

Binance has responded to the lawsuit, calling the claims “meritless” and stating that they will “vigorously defend” themselves ¹ ³. This lawsuit is one of many filed by FTX against former investors, affiliates, and clients in its ongoing bankruptcy proceedings ².

*Key Allegations:*

– _Fraudulent Transfer_: FTX claims that the share repurchase deal was fraudulent due to FTX’s insolvency ¹ ² ³

– _Misleading Tweets_: CZ is accused of posting misleading tweets that contributed to FTX’s collapse ² ³

– _Insolvency_: FTX and Alameda were allegedly insolvent at the time of the deal 

The outcome of this lawsuit remains to be seen, but it’s clear that the relationship between FTX and Binance has been strained for some time.

Referenece and Citations:

• MSN – defunct  crypto group  ftxs to claw back 1.8 bn from binance
• Cryptotimes – act token surge 2000 after binance listing
• INC.com – Jennifer Conrad/Binance  co-founder changpeng zhao  is being  sued for 1.8 billion by sam  bankman frieds failed