The complaint goes on to say that while FTX was in “free fall, Zhao also sought to prevent FTX from seeking and obtaining alternative financing in order to quell financial institutions being run by customers who had been duped by the tweets.” “He sent additional false tweets.” False public statements destroyed the value that FTX stakeholders could have otherwise recovered. ”
Binance calls the lawsuit “unfounded”
According to the lawsuit, on November 8, 2022, Bankman Freed and Zhao reached an agreement under which “Binance would acquire FTX Trading and inject sufficient capital to address FTX’s liquidity issues.” That’s what it means. However, the next day, Binance tweeted that it was withdrawing from the transaction “as a result of corporate due diligence.”
According to the complaint, when Mr. Zhao agreed to the transaction on November 8, he was “already aware that customer funds had been ‘mishandled’ during his conversations with Mr. Bankman Freed.” “This is contrary to Mr. Binance’s statement in a November 9 tweet that he learned of this fact after signing the Letter of Intent.”Additionally, Mr. Chao stated that the debtor was bankrupt at the time of signing the Letter of Intent. I was also aware of that.”
The complaint alleges that in the 24 hours between the Nov. 8 agreement and the Nov. 9 tweet, “the review process may reveal additional issues” that caused Binance to withdraw from the transaction. “No new material information was provided to Zhao and Binance.”
Binance said it will fight FTX’s lawsuit. “The allegations are baseless and we will vigorously defend ourselves,” a Binance spokesperson said in a statement provided to Ars.
Defendants also include “Does 1-1,000” people who allegedly received fraudulent transfers in 2021, “whose true names, identities, and capacities are currently unknown to Plaintiffs.” FTX seeks to recover fraudulent transfers from all defendants. FTX also asked the court to award punitive damages and find that Binance and Zhao committed fraud, harmful misrepresentation, intentional misrepresentation, and unjust enrichment.
