The entire cryptocurrency industry was celebrating the market’s uptick over the weekend. Prominent cryptocurrency exchange Binance has been in troubled waters over the past couple of years. It looks like the firm’s legal troubles haven’t come to an end yet. More recently, FTX filed a lawsuit against Binance Holdings Ltd. as well as Changpeng Zhao, the founder and former CEO of the firm. FTX is suing the world’s largest exchange for a staggering $1.8 billion.
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Here’s Why FTX is Suing Binance
This lawsuit dates back to what happened back in 2021. During July of that year, a buyback agreement with Sam Bankman-Fried (SBF), the co-founder of FTX, Binance, Zhao, and other Binance officials got the money. According to the lawsuit, about 20% of FTX’s international platform, as well as 18.4% of its US-based corporation, were sold.
In addition, the filing further notes that SBF used a combination of FTX’s exchange token FTT and Binance-branded currencies BNB and BUSD. At the time, these were worth $1.76 billion to pay for the stock buyback.
This wasn’t all. The exchange’s sister firm, Alameda Research, was also dragged in. The firm “may have been insolvent from inception.” The filing stated that FTX’s sister firm was “certainly” balance-sheet insolvent by early 2021.
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Allegations on CZ
The exchange did not spare Binance’s Changpeng Zhao. Prior to FTX’s demise, Zhao was also charged by FTX with posting on social media. He was accused of sharing a slew of “false, misleading, and fraudulent tweets.” CZ’s substance was “maliciously calculated to destroy his rival.”
Furthermore, the CZ-led exchange planned to sell its FTT tokens. This was valued at about $529 million at the time, according to a tweet by Zhao on November 6, 2022, which caused withdrawals from the exchange to soar.
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Amidst this, Binance’s native cryptocurrency, BNB, witnessed a 2% drop over the past 24 hours. At press time, BNB was trading at $621.27. It seems like the lawsuit was impacting the asset as the rest of the market continued its hot streak.
