The FTX bankruptcy estate continues to pursue litigation against cryptocurrency firms amid its bankruptcy Bankruptcy Bankruptcy or insolvency constitutes a legal term and refers to being unable to repay debts. A business and a person can declare bankruptcy. When a person or company claims bankruptcy, it is described as a voluntary bankruptcy, and when your debtors force you into bankruptcy, it is referred to as involuntary. A voluntary bankruptcy occurs when the debtor or borrower, the party that owes the money files with the courts. Involuntary bankruptcy happens when your credits file a petition with the co Bankruptcy or insolvency constitutes a legal term and refers to being unable to repay debts. A business and a person can declare bankruptcy. When a person or company claims bankruptcy, it is described as a voluntary bankruptcy, and when your debtors force you into bankruptcy, it is referred to as involuntary. A voluntary bankruptcy occurs when the debtor or borrower, the party that owes the money files with the courts. Involuntary bankruptcy happens when your credits file a petition with the co Read this Term proceedings. In a new lawsuit, a group of companies involved in the FTX case filed a complaint against Binance, seeking to recover $1.8 billion. The complaint was filed on November 10.

FTX Alleges Fraudulent Transfer

According to the filing, the plaintiffs argue that Binance, former CEO Changpeng Zhao, popularly known as CZ, and other executives at the exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term received at least $1.76 billion in a fraudulent transfer from FTX. This transfer occurred through Binance's 2021 stock repurchase agreement with Sam Bankman-Fried, co-founder of FTX, who is currently serving a 25-year prison sentence.

The transaction in question saw Bankman-Fried sell approximately 20% of FTX International and 18.4% of West Realm Shires Services, also known as FTX US, to Binance.

Bankman-Fried financed the buyback with FTX's native cryptocurrency, FTT, alongside Binance-operated tokens BNB and BUSD, which held a combined value of $1.76 billion at the time of transfer.

FTX filed a $1.76 bn lawsuit against Binance

Nov 21: Binance acquired 20% stake in FTX in Nov 2019 for $18.3m
Jul 21: FTX bought back stake which was a constructive fraudulent transfer as FTX was insolvent pic.twitter.com/SPpRSAYKl9

— Sunil (FTX Creditor Champion) (@sunil_trades) November 11, 2024

Alleged Insolvency Linked to Deal

The FTX estate alleges in the complaint that both FTX and its sister company Alameda Research “may have been insolvent from inception,” with balance-sheet insolvency established by early 2021. Given the alleged insolvency, the estate claims the stock repurchase constitutes a fraudulent transaction.

Meanwhile, Zhao was released from US custody in late September after serving a four-month sentence. In a recent interview with Bloomberg, he stated that he is receiving offers to sell his controlling stake in Binance.

However, Zhao did not disclose the identities of the interested buyers. Zhao, who founded Binance in 2017, holds a 90% stake in the exchange, as reported by Finance Magnates. His net worth is estimated at $61 billion, making him the richest crypto billionaire.