Binance CEO to Liquidate FTT Holdings in Industry Shakeup

Binance CEO Changpeng Zhao and Binance.US faced a class-action lawsuit on 2 October in the District Court of Northern California, alleging many federal and California unfair competition law violations. Nir Lahav alleges that the exchange tried to control the cryptocurrency market by affecting FTX.

Binance CEO also announced an unexpected action in disclosing plans to dispose of its remaining FTT holdings. The business obtained BUSD (Binance USD) and FTT (FTX token), totaling around $2.1 billion in cash, directly responding to Binance’s prior FTX stock exit.

Changpeng Zhao also included in a series of tweets on 6 November 2022 that encoded recent disclosures caused the decision to dispose of FTT holdings. Zhao tweeted that the exchange had started a letter of intent to acquire FTX but had withdrawn the next day, as described in the lawsuit:

“Zhao publicly disseminated this information [on the withdrawal of the acquisition offer] on Twitter and other social media platforms to hurt FTX Entities that ultimately lead to a rushed and unprecedented collapse of FTX Entities.”

Binance and Zhao Under Legal Scrutiny FTX’s Financial Woes

The lawsuit alleges that Zhao’s acquisition proposal for FTX was fraudulent and led to a significant FTT price drop, plummeting from $23.1510 to $3.1468. This lawsuit allegedly forced the futures exchange Entities into bankruptcy without the opportunity to safeguard their clients.

Changpeng Zhao’s tweets from the beginning of November coincided with the collapse of FTX, which is at the center of the legal dispute. FTX is said to have suffered significant damage due to these tweets and Binance’s decision to sell its financial transaction tax token holdings.

According to the plaintiff, Binance possessed around 5% of all financial transaction tax tokens. Zhao’s comments regarding Binance’s intentions to acquire FTX and the company’s subsequent withdrawal from the agreement significantly contribute to future exchange problems.

The SEC is looking into FTX and Binance, and on 4 October, a criminal trial for Bankman-Fried will begin in New York. In response to any charges of unfair competition, Zhao observed in the same tweet referenced in the complaint, “This is not a move against a competitor,” he also included.

Related Reading: Binance Reacts To Paysafe Exit, Recommends Euro-to-USDT Shift

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