By Mark Hunter
3 weeks agoTue Nov 12 2024 09:04:57
Reading Time: 2 minutes
- FTX has filed a lawsuit against Binance and its former CEO Changpeng Zhao (CZ), claiming $1.8 billion in damages
- The lawsuit accuses Binance of engaging in practices that allegedly contributed to FTX’s collapse
- Binance has responded, denying the allegations and asserting compliance with legal and regulatory standards
Bankrupt exchange FTX has taken legal action against Binance and its former CEO, Changpeng Zhao, in a bid to recover $1.76 billion. FTX’s lawsuit accuses Binance of engaging in practices that allegedly worsened FTX’s financial situation, accelerating its path to collapse. Binance has denied any wrongdoing, responding that it has acted within all applicable legal guidelines and intends to contest the lawsuit.
FTX: Binance Destabilized Our Operations
In the lawsuit, FTX alleges that Binance, leveraging its dominant market position, carried out actions that severely destabilized FTX’s operations. In November 2022, with FTX on the rocks, Binance expressed an interest in buying out the exchange . However, after conducting due diligence, it pulled out , effectively killing Sam Bankman-Fried’s last hope of rescue. It collapsed just days later.
According to FTX, Binance used unfair tactics to manipulate cryptocurrency prices, which allegedly resulted in major financial losses for FTX and weakened investor confidence. Another accusation claims that Binance spread false information about FTX’s financial stability, further deteriorating its reputation in the market. FTX believes these actions significantly impacted its ability to operate sustainably, ultimately leading to its financial collapse.
Binance Denies Allegations
In response to the allegations, Binance has firmly denied any involvement in FTX’s collapse. A Binance representative stated, “We categorically deny the claims made in this lawsuit and maintain that we have always operated within legal and regulatory standards.” The spokesperson added that Binance views the lawsuit as “baseless” and emphasized that Binance will “vigorously defend against these claims.”
Binance’s stance is that the collapse of FTX was due to internal issues within FTX and unrelated to any external interference. This is undoubtedly true, but it will be up to a judge to decide if Binance’s actions played any part in that.
