Key Points:
Read more: Binance Founder CZ Increases Net Worth to $53 Billion After Trump Win
According to estate legal documents from FTX, the issue is funding from a July 2021 share repurchase agreement in which Binance executives, including Zhao, sold off a roughly 20% stake in FTX International and an 18.4% share of its U.S.-based entity.
The deal, worth $1.76 billion, was funded through a combination of FTX’s exchange token, FTT, with Binance’s tokens, BNB and BUSD. FTX has said it believes that both it and its affiliate, Alameda Research, may have been insolvent from inception and by early 2021 was unable to be financially sustainable. As such, the estate insists the share buyback was, from the outset, fraudulent.
The lawsuit also claims that Zhao’s social media activity brought down FTX. In a tweet dated November 6, 2022, CZ announced that the exchange was selling its FTT tokens, which then had a market value of about $529 million.
This announcement allegedly triggered an increase in the number of FTX withdrawals and hastened the exchange’s collapse. According to FTX’s estate, Binance founder CZ has been spreading false information due to malice, aiming to bring down his competitor.
The lawsuit is part of the broader effort by FTX to recover assets from one-time investors and partners as it tries to sort through billions of dollars in bankruptcy claims. Among other defendants are Crypto.com, Anthony Scaramucci, the onetime White House communications director, and FWD.US, a political advocacy group founded by Mark Zuckerberg.
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