Bankrupt and disgraced FTX is suing Binance for $1.8 billion in crypto feud

Captured crypto king Sam Bankman-Fried is now accused of even more misconduct, this time by the defunct exchange he founded.

FTX, once the darling of the digital currency world, is suing fellow crypto exchange boss Changpeng “CZ” Zhao, the Binance founder who acquired an equity stake in FTX in 2019 and alleged that Bankman-Fried, colloquially known as “SBF,” committed fraud in striking a later, related deal with Zhao and wants his $1.76 billion back.

The lawsuit was filed Delaware bankruptcy court by those winding down the now closed FTX. The previously high-flying startup filed for Chapter 11 in 2022.

Bankman-Fried’s “pervasive offending began that same year long before it was discovered,” the lawsuit said. It says he knew that secretly FTX was effectively insolvent when he agreed to buy back Zhao’s shares in the company in July 2021, making the transfer fraudulent. The money Bankman-Fried paid Zhao illegally funded by plundering customer accounts, according to the lawsuit. Bankman-Fried is about eight months into a 25-year sentence on seven federal fraud and conspiracy charges.

Binance is today the largest cryptocurrency exchange in the world by trading volume, the lawsuit explains, pointing to its more than $100 trillion in trading value at one time. But, the report states, “Binance and Zhao achieved their success largely due to their blatant disregard for and affirmative violations of the laws of the United States.” The lawsuit notes Zhao’s four-month prison sentence in 2024 for flouting anti-money laundering policies and “flowing money to terrorists, cybercriminals and child molesters through his platform.”

After Zhao divested his FTX investment, he immediately began trying to ruin the company, which is now a competitor, according to the lawsuit.

“As FTX grew, it became a clear threat to Binance’s market dominance,” it says. “…Starting on November 6, 2022, Zhao sent a series of false, misleading and fraudulent tweets maliciously intended to destroy its rival FTX, with reckless disregard for the harm that FTX’s customers and creditors would suffer…Zhao’s False Tweets triggered a predictable avalanche of withdrawals at FTX – the proverbial run on the bank that Zhao knew would collapse FTX.”

Adding to FTX’s already mounting problems, Zhao posted “additional false tweets, intended in part to prevent FTX from seeking and obtaining alternative financing to cauterize the run on the institution by customers misled by the tweets.”

Binance also paid crypto influencers to post “explosive tweets” about FTX designed to alienate its customers because of Bankman-Fried’s support for crypto regulation, the lawsuit said. What made matters worse was the Binance-backed anti-Bankman-Fried YouTube And TikTok videos, along with posts from Telegram and Reddit, which were “widely distributed, sometimes receiving hundreds of thousands of views and comments,” according to the indictment.

“Collectively and individually,” the lawsuit continues, “these false public statements destroyed value that could otherwise be recovered by FTX’s stakeholders.”

FTX is now seeking on behalf of its creditors to recover the $1.76 billion that Binance claims it wrongly received, as well as compensatory and punitive damages to be determined at trial.