Binance, the world’s largest cryptocurrency exchange, has formally requested a U.S. bankruptcy court in Delaware to dismiss a $1.76 billion lawsuit filed by the defunct exchange FTX. In its filing, Binance argued that the allegations are baseless and intended to “shift blame” away from Sam Bankman-Fried (SBF), the disgraced founder of FTX who is currently serving a 25-year prison sentence for fraud.
FTX Alleges Binance Contributed to Its Collapse
In November 2024, FTX filed a lawsuit against Binance Holdings Ltd., its former CEO Changpeng Zhao (CZ), and other executives, accusing them of receiving $1.76 billion in fraudulent transfers. FTX claims that these transactions contributed to its financial collapse, which left creditors owed over $11 billion.
The lawsuit specifically targets a share buyback deal from July 2021, when FTX repurchased a 20% stake it had previously sold to Binance in 2019. According to FTX, the buyback was funded using customer deposits—approximately $1 billion, or 60% of the total transaction value—without disclosing this to users. FTX argues that it was already insolvent at the time, making the transfer improper under bankruptcy law.
However, Binance disputes these claims, asserting that there is no evidence to support the allegations.
“FTX remained operational for 16 months after the transaction, and there is no evidence that the transaction was illegal.” – Binance representative wrote.
Binance Refutes Claims and Questions Jurisdiction
Binance’s motion to dismiss highlights several key arguments:
- Lack of Evidence : Binance contends that FTX operated for 16 months after the alleged transaction without issue, undermining claims that the deal directly caused its downfall.
- No Jurisdiction : The defendants, including CZ and other Binance executives, do not reside in the U.S. and did not directly conduct the relevant transactions within U.S. borders. Therefore, Binance argues that the U.S. court lacks jurisdiction to hear the case.
- Context of CZ’s Tweets: Binance refuted accusations that CZ intentionally caused market panic through tweets in November 2022, where he announced plans to sell all of Binance’s FTT holdings.
“These tweets were posted in response to revelations about FTX’s financial situation… There is no evidence to prove these statements are false,” the filing stated.
Binance maintains that the lawsuit is an attempt by FTX’s asset recovery trustee to deflect responsibility for the exchange’s collapse onto external parties, rather than addressing internal mismanagement led by SBF.
Broader Implications for FTX’s Recovery Efforts
This lawsuit is part of a broader effort by FTX’s trustees to recover assets and offset the exchange’s massive debt obligations. If successful, the recovered funds would be redistributed to creditors as part of FTX’s ongoing bankruptcy proceedings.
According to the current plan, FTX will begin redistributing assets to creditors on May 30th. However, the outcome of this lawsuit could significantly impact the scale and timeline of those payouts.
What Happens Next?
The case is still pending a decision from the Delaware judge. If the court grants Binance’s motion to dismiss, the exchange will avoid liability entirely. Conversely, if the dismissal request is denied, the case could proceed to discovery and settlement stages, potentially dragging out the legal battle further.
For now, both sides remain entrenched in their positions. While FTX seeks to hold Binance accountable as part of its recovery strategy, Binance insists that the allegations lack merit and stem from an attempt to shift blame for FTX’s collapse.
