Binance seeks dismissal of $1.76B FTX lawsuit, blames fraud
Binance rejects FTX $1.76B suit, blames fraud.
Binance has moved to dismiss a $1.76 billion lawsuit filed by the FTX estate, claiming the defunct exchange is wrongly shifting blame for its collapse.
Filed on May 16 in the Delaware Bankruptcy Court, Binance’s legal team described the case as “legally deficient”, arguing that FTX’s downfall stemmed from internal fraud, not external actions.
Key takeaways
- Binance calls the $1.76B lawsuit legally baseless, citing SBF’s fraud as the cause of FTX’s collapse.
- Zhao’s tweet about FTT liquidation was a reaction to public reporting, not a coordinated attack.
- FTX’s share repurchase deal, cited in the lawsuit, occurred 16 months before the collapse.
- Binance has requested full dismissal with prejudice; the FTX estate has not yet responded.
Binance pushes back on legal claims
The lawsuit alleges Binance and its former CEO, Changpeng Zhao, played a role in destabilizing FTX by publicly announcing plans to liquidate FTT holdings in 2022. Binance counters that these actions were based on public information and market risk, not manipulation.
In its legal filing, Binance argues the lawsuit misrepresents the cause of FTX’s bankruptcy, asserting the platform collapsed under the weight of “one of the most massive corporate frauds in history.” The filing cites Sam Bankman-Fried’s conviction on seven counts of fraud and conspiracy as evidence that the collapse was internally driven.
FTX collapse. Source: CryptoQuant
Challenging the FTT tweet allegation
The complaint accuses Zhao of triggering a bank run on FTX with his November 6, 2022 tweet announcing Binance would liquidate its FTT holdings. Binance responded that the decision was based on a November 2 CoinDesk article revealing weaknesses in Alameda Research’s balance sheet, which created legitimate concerns.
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Jurisdictional and transactional defense
Binance further argues that none of the named corporate entities are U.S.-based, and thus the Delaware court lacks jurisdiction. Regarding the 2021 FTX share buyback deal, the company said FTX remained solvent for 16 months afterward, refuting claims that the transaction was based on misappropriated customer funds.
Binance’s motion to dismiss signals its intent to distance itself from the FTX collapse narrative, placing the blame squarely on the fraudulent conduct of FTX insiders. With a potential precedent at stake, the outcome of this case could shape future legal responsibility standards in the cryptocurrency sector.
Read also: FTX cuts $2.5 billion in claims after 392K users fail to meet KYC deadline.
