The insolvent crypto exchange FTX has sued Binance and its former CEO Changpeng Zhao over an alleged fraudulent transaction worth $1.8 billion. The lawsuit relates to a deal from July 2021, in which Binance and Zhao sold approximately 20 percent of their shares back to FTX in exchange for crypto tokens valued at $1.76 billion.

According to the lawsuit filed in Delaware on Sunday, the transaction was not lawful because FTX and the affiliated trading firm Alameda Research may have been insolvent already at their founding or by early 2021 at the latest. The FTX bankruptcy administration is now demanding the return of the tokens to the bankruptcy estate.

The deal was a "constructive fraudulent transaction," according to the lawsuit, as the transfer of crypto assets to Binance and some of its executives should not have occurred under these circumstances.

FTX founder Sam Bankman-Fried, who originally agreed to the repurchase of shares with Zhao, is currently serving a 25-year prison sentence for fraud. Zhao resigned as Binance CEO in April and also spent four months in custody after pleading guilty to neglecting anti-money laundering requirements.

This lawsuit is the latest chapter in the dispute between two of the world's largest crypto exchanges, as FTX continues to try to settle its debts following the spectacular collapse in 2022, which triggered a drop in crypto prices and forced other companies into bankruptcy.

The claims are unfounded, and we will defend ourselves vigorously," explained Binance in a statement.