The cryptocurrency industry was abuzz with excitement over the weekend as the market saw an uptick in prices. However, amidst the celebrations, one of the biggest players in the industry, Binance, found itself in hot water once again. The prominent cryptocurrency exchange has been facing legal troubles for the past couple of years, and it seems like the storm is far from over.
FTX, another major player in the cryptocurrency space, has filed a lawsuit against Binance Holdings Ltd. and its founder and former CEO, Changpeng Zhao. The lawsuit seeks a staggering $1.8 billion in damages, making it one of the largest legal actions in the industry to date.
The roots of this lawsuit can be traced back to events that took place in 2021. In July of that year, a buyback agreement involving Sam Bankman-Fried, the co-founder of FTX, Binance, Zhao, and other Binance officials took place. According to the lawsuit, a significant portion of FTX’s international platform and US-based corporation was sold off, with the payment being made using a combination of FTX’s exchange token FTT and Binance-branded currencies BNB and BUSD, totaling $1.76 billion.
The lawsuit also implicates FTX’s sister firm, Alameda Research, alleging that it may have been insolvent from the beginning and certainly balance-sheet insolvent by early 2021. The filing further accuses Changpeng Zhao of posting false, misleading, and fraudulent tweets on social media, with the intention of harming his rivals in the industry.
The impact of the lawsuit was felt in the market, with Binance’s native cryptocurrency, BNB, experiencing a 2% drop in value over the past 24 hours. At the time of writing, BNB was trading at $621.27. Despite this setback, the rest of the market continued its positive momentum.
As the legal battle between FTX and Binance unfolds, the cryptocurrency industry is once again reminded of the challenges and controversies that come with operating in this rapidly evolving space. The outcome of this lawsuit could have far-reaching implications for both companies and the broader industry as a whole.