Key Notes
- Binance filed a motion to dismiss a $1.76 billion clawback suit from the FTX estate.
- Motion claims that FTXโs claims are baseless and the court lacks jurisdiction since Binance and CZ are not US citizens.
- While legal battles continue, the FTX Recovery Trust is preparing to distribute over $5 billion to creditors.
In a legal rebuttal filed on May 16, crypto exchange Binance asked a Delaware bankruptcy court to dismiss a $1.76 billion clawback lawsuit brought by the FTX estate.ย
In the documentation, the leading digital asset trading platform accused FTX of rewriting history to deflect blame from its disgraced founder, Sam Bankman-Fried (SBF).ย
Binance Moves to Dismiss FTX Lawsuit
The motion, submitted by lawyers for the worldโs largest centralized crypto exchange, calls the lawsuit โlegally deficientโ and rooted in speculation sourced largely from a โconvicted fraudsterโs hindsight.โ
At the core of the dispute is a 2021 transaction in which FTX repurchased Binanceโs 20% equity stake using a mix of crypto assets, including FTXโs native FTT token, BUSD, and BNB.ย
The FTX estate now claims that the deal was funded with misappropriated customer funds and that the company was already insolvent at the time, an assertion Binance strongly denies.
A Fight Over Blame and Billions
According to the lawsuit, Binance was unjustly enriched through the $1.76 billion deal and played an active role in FTXโs collapse.ย
The FTX estate alleges that Binance CEO Changpeng Zhao (CZ) orchestrated a damaging run on the rival platform through a November 2022 tweet announcing the liquidation of FTT holdings.ย
https://x.com/cz_binance/status/1589283421704290306
The move, it claims, triggered mass withdrawals and pushed the already struggling exchange over the edge.
Binance rejects that narrative outright. In court papers, its lawyers stress that FTX continued operating for 16 months after the 2021 repurchase, suggesting that the deal could not have been the cause of its eventual downfall.ย
They also say that CZโs tweet was not a malicious act but a reaction to legitimate market concerns, specifically a Nov. 2, 2022 CoinDesk article that revealed alarming details about Alameda Researchโs balance sheet.
Deflecting From โOne of the Most Massive Corporate Fraudsโ
Binanceโs motion accuses the FTX estate of attempting to โshift the blameโ for its spectacular collapse onto external actors. It added that Bankman-Fried, not Binance, was at the helm of what a federal judge has called โone of the most massive corporate frauds in history.โย
SBF was sentenced to 25 years in prison earlier this year on seven counts of fraud and conspiracy, after being found guilty of misusing billions in customer funds and lying to investors, regulators, and the public.
Binanceโs lawyers argue that the estate is effectively pretending that FTXโs collapse wasnโt the result of internal rot but an outside conspiracy, a claim they say is unsupported by fact or law.
Disclaimer: Coinspeaker is committed to providing unbiased and transparent reporting. This article aims to deliver accurate and timely information but should not be taken as financial or investment advice. Since market conditions can change rapidly, we encourage you to verify information on your own and consult with a professional before making any decisions based on this content.
A crypto journalist with over 5 years of experience in the industry, Parth has worked with major media outlets in the crypto and finance world, gathering experience and expertise in the space after surviving bear and bull markets over the years. Parth is also an author of 4 self-published books.
