After the US elections, Bitcoin is rising steadily, but some crypto exchanges want to settle the score. FTX, a crypto exchange platform that shut down a couple of years ago, filed a lawsuit against its rival exchange Binance for around $1.8 billion. This action was taken to recover the amount of around $2 billion sent by FTX CEO Sam Bankman.
This lawsuit was recently filed in Delaware Bankruptcy Court on 10th November. The whole scenario was related to the transaction involved which was done by the FTX CEO.
That humongous transaction was carried out in July 2021, when the FTX exchange purchased back some stakes from Binance CEO Changpeng Zhao and other Binance executives. This deal was carried out by the FTX subsidiary company Alameda Research.
The erstwhile CEO of Alameda Research, Caroline Ellison witnessed in the court that Alameda had to scrutinize about $1 billion FTX’s capital which they received from its depositors. This was actually done to pay for the share repurchase. Consequently, FTX has claimed that the fraudulent transaction was wrong.
The lawsuit explains that FTX shares were bought back through share repurchase which were totally worthless based on the accounting process of FTX company’s assets and liabilities.
In 2021, FTX purchased back around 20% stake in the platform and around 18.4% stake in its other firm in the US whose name is West Realm Shires.
Well, Binance has not yet commented on the current matter. They said in other publications that the claims are baseless without any evidence, and they will meticulously defend the case.
Both the CEOs, Zhao and Bankman were amicably running the crypto changes as they were heads of the largest crypto exchanges as per the volume at the particular time. Even Binance’s CEO first invested in the FTX exchange when it was launched in 2019.
But after the following years and that particular transaction deteriorated the whole relationship. The lawsuit also mentioned that Zhao was accused of making misleading tweets that defamed the rival company’s reputation among its customers and creditors. As a result, both parties suffered a lot, customers were unable to withdraw their hard-earned money.
FTX CEO was prisoned for 25 years following this aftermath and collapse of FTX in 2022. Eventually, customers’ funds were also lost which were calculated around $10 billion.
Also in April, Binance’s CEO was sentenced to 4 months for permitting money laundering on the exchange.
