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Defunct crypto startup FTX sued onetime investor Binance and its founder Changpeng Zhao over the weekend, seeking to claw back nearly $1.76 billion.

Why it matters: If it succeeds, it could mean additional capital for creditors.

Between the lines: FTX's reorganization plan is set to pay back most customers their full amount with interest, but government agencies and investors were among those expected to get, at best, fractions on their claims.

Meanwhile, customers have complained over the payout, as the cash returns means they've missed out on the recent crypto rally.

Driving the news: The two had a messy relationship, starting out as friends in 2019, when Binance bought a 20% stake.

The relationship soured just two years later, with FTX and its sister hedge fund Alameda agreeing to buy back Binance's stake in its business in a deal the estate claims was worth at least $1.76 billion at the time.

But the lawsuit alleges that Alameda was insolvent at the time of the share repurchase, meaning it spent about $1 billion of FTX customer funds to pay for the deal — making it a fraudulent transfer.

The intrigue: Zhao actively contributed to FTX's downfall and selloff in 2022, the lawsuit further alleges.

Days after Coindesk published its article showing the unusual ties between FTX and sister hedge fund Alameda, Zhao tweeted that he would sell his FTX tokens, FTT, at the same time a selloff in FTT happened.

That tweet, along with a string of others, have been highly debated for their role in FTX's eventual failure.

"Having divested himself of his equity stake in his rival FTX, Zhao then set out to destroy his now-unaffiliated competitor," the lawsuit read. "To make matters worse, with FTX in freefall, Zhao sent additional false tweets calculated, in part, to prevent FTX from seeking and obtaining alternative financing to cauterize the run on the institution by customers deceived by the tweets."

What they're saying: "The claims are meritless, and we will vigorously defend ourselves," Binance said in a statement.

The big picture: FTX also launched a flurry of other lawsuits late last week aimed at clawing back capital, including one against Anthony Scaramucci.

FTX sues former investor Binance and CZ over $1.8b

The suit also addresses CZ's infamous tweets from 2022.

Illustration of a bear claw holding a crypto coin.

Fintech

Defunct crypto startup FTX sued onetime investor Binance and its founder Changpeng Zhao over the weekend, seeking to claw back nearly $1.76 billion.Why it matters: If it succeeds, it could mean additional capital for creditors.

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FTX sues former investor Binance and CZ over $1.8b

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