- Binance filed to dismiss a $1.76B lawsuit, claiming FTX’s collapse was due to Bankman-Fried, not the 2021 share repurchase deal.
- Binance argues FTX wasn’t insolvent in 2021 and the lawsuit lacks proof linking Zhao to misused customer assets or fraud.
- Binance denies Zhao’s 2022 tweet caused FTX’s downfall, citing prior internal revelations as the real trigger for withdrawals.
Binance has filed a motion to dismiss a $1.76 billion lawsuit brought by the FTX estate, arguing that the claims lack legal basis and wrongly seek to redirect blame from former FTX CEO Sam Bankman-Fried.
In court documents submitted Friday to a Delaware bankruptcy judge, Binance said the case fails to plausibly connect the exchange or its former CEO, Changpeng Zhao, to FTX’s collapse.
The lawsuit, filed in November 2023, aims to recover crypto transferred to Binance in a July 2021 deal. Binance called the lawsuit an attempt to “shift the blame” from Bankman-Fried, who is currently serving a 25-year sentence for fraud.
Share Repurchase and Alleged Misused Funds
According to filings, the dispute stems from a 2021 transaction where FTX repurchased a 20% stake previously sold to Binance in 2019. FTX allegedly paid Binance using a combination of BNB, BUSD, and FTT tokens.
The estate claims FTX was already insolvent during the repurchase and used misappropriated customer assets to complete the deal. However, Binance countered that FTX continued operations for 16 months after the repurchase.
It argued this timeline challenges the notion that insolvency existed at the time of the transaction. The exchange emphasized that there is no factual basis showing the deal harmed FTX’s financial position directly.
Binance further stated that the lawsuit fails to provide evidence linking Zhao or the company to fraudulent conduct.
Zhao’s Tweet Cited as Trigger, Binance Pushes Back
FTX’s estate also cited a tweet by Zhao on November 6, 2022, as a factor in the platform’s downfall. The tweet announced Binance’s decision to liquidate its FTT holdings “due to recent revelations.”
The estate claims this announcement prompted massive customer withdrawals, which accelerated FTX’s crash. Binance rejected this argument, asserting that Zhao’s post followed a report that exposed internal issues at FTX.
It stated the complaint lacks evidence that the tweet contained false or misleading information. The exchange insisted that Zhao’s actions were not coordinated to damage FTX’s business.
Jurisdiction Disputed as Legal Battle Intensifies
In addition to challenging the lawsuit’s substance, Binance questioned the court’s jurisdiction over the case.
The motion pointed out that Binance and its affiliated corporate entities are based outside the United States. It also stressed that Zhao had no direct involvement in the share repurchase deal.
The legal clash forms part of FTX’s broader effort to recover over $11 billion for its creditors. According to earlier reports, the estate expects to begin distributing bankruptcy payouts starting May 30.
