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BlockNews
Home BUSINESS

Here is the Real Reason FTX is Suing Binance for $1.8 Billion

Michael Juanico by Michael Juanico
November 11, 2024
in BUSINESS, CRYPTO, FEATURED
Reading Time: 3 mins read
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  • FTX has filed a lawsuit against Binance and its founder Changpeng Zhao (CZ), seeking $1.8 billion in damages.
  • The lawsuit alleges that in 2021, Binance and CZ misled FTX during a buyback agreement involving FTX’s exchange token FTT and Binance’s tokens BNB and BUSD.
  • The lawsuit also accuses CZ of posting false and misleading tweets aimed at destroying FTX before its collapse, and Binance’s planned sale of its FTT holdings worth $529 million triggered massive withdrawals from FTX.

Cryptocurrency exchange FTX has filed a massive lawsuit against rival exchange Binance and its founder Changpeng Zhao. This latest legal battle stems from a stock buyback deal between the two companies in 2021.

ICYMI: FTX is suing Binance $BNB and ex-CEO @cz_binance for $1.8 billion 😳 pic.twitter.com/TnuruyVivR

— BlockNews (@blocknewsdotcom) November 11, 2024

Background on the Buyback Deal

In July 2021, FTX co-founder Sam Bankman-Fried entered into an agreement with Binance to buy back shares in FTX’s international and US-based platforms.

Bankman-Fried used a combination of FTX’s native token FTT and Binance’s native tokens BNB and BUSD, worth $2.1 billion at the time, to pay for the buyback. FTX’s sister firm Alameda Research was also involved in the deal.

Allegations Against Binance and CZ

In its lawsuit, FTX alleges that CZ intentionally spread false information on social media to undermine confidence in FTX. This includes tweets about Binance planning to sell its large FTT holdings, which triggered mass withdrawals from FTX.

FTX also claims that Alameda Research was insolvent when the buyback deal was made in 2021, and that Binance and CZ knew about this.

The lawsuit seeks damages of $1.8 billion from Binance and CZ over the buyback deal.

Impact on the Crypto Market

The lawsuit has added to the ongoing troubles plaguing Binance. It also comes on the heels of FTX’s high-profile collapse.

Binance’s native token BNB has fallen over the past day amid the lawsuit news. However, the overall crypto market continues to recover from recent crashes.

This latest legal battle between the two exchanges will likely drag on for some time. It represents another period of uncertainty for the crypto industry as it seeks to rebuild trust after a turbulent year.

Disclaimer: BlockNews provides independent reporting on crypto, blockchain, and digital finance. All content is for informational purposes only and does not constitute financial advice. Readers should do their own research before making investment decisions. Some articles may use AI tools to assist in drafting, but every piece is reviewed and edited by our editorial team of experienced crypto writers and analysts before publication.
Tags: Alameda ResearchBinanceChangpeng ZhaoFTXSam Bankman-Fried
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Michael Juanico

Michael Juanico

Michael is a BSBA Management graduate from Mindanao State University and has been a professional content writer since 2019. He began exploring cryptocurrency in 2021 and has since made blockchain and digital assets his primary focus. For nearly four years, Michael has contributed research and editorial content at Aiur Labs and BlockNews, producing clear and accessible coverage of market trends, trading strategies, and project developments. He is transparent about his personal holdings in Bitcoin, TRON, and select meme tokens, combining writing expertise with hands-on market experience to deliver trustworthy insights to readers.

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