Binance Hits Back at FTX’s $1.76B Lawsuit, Blames Collapse on “Historic Fraud”
Key Takeaways:
- Binance moves to dismiss FTX’s $1.76B lawsuit, calling it “legally deficient” and blaming FTX’s internal fraud.
- The lawsuit stems from a 2021 buyback deal, with FTX alleging misuse of customer funds.
- Binance defends CZ’s 2022 tweet as a reaction to public reports, not an act of market manipulation.
Binance has formally responded to the FTX estate’s $1.76 billion lawsuit with a sharp rebuttal, filing a motion to dismiss the case entirely. The exchange says the claims are not only meritless but also an attempt to rewrite the history of FTX’s collapse—a downfall it attributes to Sam Bankman-Fried’s massive fraud, not any external influence.
FTX’s Buyback Allegations and Binance’s Response
In 2021, FTX repurchased a 20% stake previously sold to Binance for $1.76 billion, paid in a mix of BNB, BUSD, and FTT. Now, the FTX estate alleges that the repurchase was financed improperly using customer assets, at a time when the exchange was already insolvent.
Binance, in its May 16 court filing, rejected the premise entirely. Its legal team argues that FTX remained operational for 16 months following the deal—hardly the behavior of a company on the brink of collapse. The motion adds that the buyback was executed transparently and involved no red flags at the time.
“Plaintiffs are pretending that FTX did not collapse as the result of one of the most massive corporate frauds in history,” Binance stated, directly referencing Sam Bankman-Fried’s criminal conviction on seven counts of fraud and conspiracy.
Read More: Backpack Starts Claim Process for FTX EU Fund After Acquiring FTX Subsidiary
CZ’s Tweet in the Spotlight Again
Was the FTT Tweet a Trigger—or a Warning?
FTX also claims that a tweet by then-Binance CEO Changpeng Zhao (CZ) on November 6, 2022—which announced plans to liquidate Binance’s FTT holdings—sparked panic withdrawals and led to its eventual implosion.
Binance contends this narrative is misleading. The tweet, it says, came just days a damning report on Alameda Research’s balance sheet, showing that a significant portion of its assets were illiquid FTT tokens. Binance claims it merely acted on that public information to mitigate risk, not to manipulate markets.
“The complaint contains no facts to suggest that the tweets were false,” the filing states, reinforcing that CZ’s statements reflected genuine risk management.
In fact, Binance had received approximately $2.1 billion in FTT and BUSD as part of its FTX equity exit deal. Binance stated it wanted to liquidate its holdings responsibly to minimize market disruption—an intent FTX now calls into question without offering substantive proof.
Jurisdiction and Legal Grounds Under Fire
Binance’s defense also takes aim at the legal basis of the case. The exchange says the court lacks jurisdiction because none of the entities named are U.S.-based or conducted business from the United States. This argument leans on established safe-harbor protections and challenges the FTX estate’s attempt to apply U.S. state laws in a bankruptcy proceeding.
Calling the complaint “a grab bag of speculative state claims,” Binance emphasized that much of the suit relies on hindsight and the word of “a convicted fraudster.”
Read More: Gemini and SEC Ask for 60-Day Lawsuit Pause to Investigate Possible Resolution
The Bigger Picture: Billions at Stake in FTX’s Recovery Efforts
The legal battle unfolds as the FTX estate prepares a second round of creditor repayments starting May 30. Over $5 billion is expected to be distributed via BitGo and Kraken to convenience class creditors, with total repayments possibly reaching $16 billion. However, the $1.76 billion claim against Binance remains one of the estate’s most high-profile legal maneuvers.
Binance has asked the court to dismiss the suit entirely, with prejudice. FTX has yet to file a formal response.
As crypto’s most controversial bankruptcy case drags on, the Binance–FTX dispute underscores just how much unfinished business remains in the aftermath of the industry’s most infamous collapse.
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