• FTX is suing Binance and ex-CEO Changpeng Zhao for $1.8 billion.
• Claims $1.76 billion was “fraudulently” transferred in crypto assets.
• Binance’s stake sale in FTX is under scrutiny as “questionable.”
• Lawsuit hints FTX may have been on shaky ground from the start.

In the latest twist of FTX’s relentless push to recover what’s left after its collapse, the bankrupt crypto giant is now going after Binance and its high-profile former CEO, Changpeng Zhao (CZ), in a legal showdown worth a jaw-dropping $1.8 billion. Once allies, now courtroom adversaries, FTX’s new leadership alleges that these funds were wrongfully moved to Binance as FTX’s financial health quietly deteriorated.

In July 2021, former FTX CEO Sam Bankman-Fried allegedly moved $1.76 billion in FTT, BNB, and BUSD tokens to Binance, giving CZ’s exchange a sizable stake in FTX’s international operations and a chunk of its U.S. arm. FTX’s new team claims this transfer was a fraudulent “cash-out,” insisting the company’s financial state was already hanging by a thread at the time.

So, what’s really at the heart of this lawsuit? Let’s break it down.

The $1.8 Billion Transfer: Genuine Deal or Financial Smoke Screen?

According to FTX’s lawsuit, the $1.76 billion was moved out during a time when FTX and its sister trading firm, Alameda Research, were allegedly insolvent, or pretty close to it. FTX’s new leaders are arguing that the transfer was a desperate cash infusion disguised as a partnership, with SBF allegedly swapping crypto tokens to keep things afloat. Binance, which sold its stake in FTX afterward, is now under fire for what FTX claims was essentially a cash-out deal veiled as a legitimate transaction.

If this accusation holds up, FTX’s leadership could have a path to claim back these funds, arguing that they were never FTX’s to give in the first place. They say Alameda and FTX “may have been insolvent from inception,” making the transfer fraudulent under bankruptcy law.

Did CZ’s Public Statements Trigger FTX’s Collapse?

The lawsuit gets even more interesting when it addresses CZ’s famous tweet on November 6, 2022. CZ publicly announced that Binance planned to dump its FTT holdings, worth around $530 million. 

https://twitter.com/cz_binance/status/1589283421704290306

That post set off a firestorm. Users rushed to pull out their funds, triggering a liquidity crisis at FTX that spiraled into a full-scale collapse within days. FTX’s new leadership suggests that CZ’s tweet may have been more than just a business decision — they claim it was a calculated move that fueled the frenzy.

Now, the lawsuit hints that CZ’s move wasn’t just reactive; it may have been intentionally “misleading and fraudulent,” effectively putting the final nail in FTX’s coffin. CZ, however, maintains he acted transparently, expressing Binance’s need to limit its exposure to FTX. Still, FTX’s leadership argues that this public gesture led to their downfall and could have played a key role in its spiraling into bankruptcy.

FTX’s Legal Crusade to Recover Billions

This lawsuit against Binance and CZ is just one in a long line of aggressive moves by FTX’s new leadership, who seem committed to digging under every financial rock for assets. Their goal? To reclaim any funds that might help repay FTX’s creditors, who have been left stranded since the exchange’s collapse.

Only recently, FTX closed a deal with Bybit, another former partner, securing a $228 million settlement. It’s clear FTX is serious about clawing back any cash that might lessen the financial hit on creditors and investors.

FTX’s legal strategy reflects a broader narrative in the crypto world: when the going gets tough, even former allies may not be safe from the fallout. In an industry known for its fast friendships and even faster betrayals, this lawsuit could reshape the way major players think about deals — especially in the stormy waters of financial instability.