FTX Used Billions in Customer Funds to Buy Back Binance Stake

Binance CEO Changpeng Zhao said in a 2022 post the company had received over $2.1 billion in binance usd (BUSD) stablecoins and FTX’s FTT tokens.

AccessTimeIconOct 19, 2023 at 8:06 a.m. UTC
Updated Oct 19, 2023 at 9:12 a.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

Bankrupt crypto exchange FTX used customer funds to buy back the entirety of the firm’s stake held with competitor exchange Binance, a court hearing on Wednesday revealed.

Binance CEO Changpeng Zhao said in a 2022 post the company had received over $2.1 billion in binance usd (BUSD) stablecoins and FTX’s FTT tokens as part of the repurchase.

Peter Easton, an accounting professor at the University of Notre Dame, has been hired by the U.S. Department of Justice (DOJ) to trace the billions of dollars between Alameda and FTX as part of the ongoing Sam Bankman-Fried trial.

“Oh, yes,” Easton said when asked by the court whether FTX ever spent user deposits. The professor testified these user deposits were reinvested into businesses and real estate, used to make political contributions and donated to charity, as reported.

These deposits were used to buy back Binance’s shares in FTX. “Over a billion dollars came from customer funds from FTX exchange,” Easton testified on Wednesday.

In 2019, Binance invested an undisclosed amount of money in FTX as part of a strategic partnership between the two firms. The then-infant FTX processed $500 million daily in trades, a far cry from the over $50 billion at its peak.

Relations between the two gradually soured over the years, even spilling over to social media.

Edited by Parikshit Mishra.


Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is an award-winning media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. In November 2023, CoinDesk was acquired by Bullish group, owner of Bullish, a regulated, institutional digital assets exchange. Bullish group is majority owned by Block.one; both groups have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary, and an editorial committee, chaired by a former editor-in-chief of The Wall Street Journal, is being formed to support journalistic integrity.

Shaurya Malwa

Shaurya is the Deputy Managing Editor for the Data & Tokens team, focusing on decentralized finance, markets, on-chain data, and governance across all major and minor blockchains.

Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.