TLDR
- Binance has filed a motion in Delaware court to dismiss a $1.76 billion lawsuit from the FTX estate.
- The lawsuit concerns a 2021 equity buyback deal over a year before FTX’s collapse.
- Binance argues that FTX has not presented adequate evidence to support its legal claims.
- The company states that the lawsuit diverts blame from FTX’s former leadership.
- Binance denies any involvement in the misuse of FTX customer funds.
Binance has asked a Delaware court to dismiss a $1.76 billion lawsuit filed by the FTX estate. The dispute stems from a 2021 equity buyback agreement between the companies before FTX collapsed. Binance denies any wrongdoing and argues that the case lacks legal grounds.
Binance Disputes Legal Basis of Lawsuit
Binance’s legal team maintains that the FTX estate has not provided sufficient evidence to support the claims in the lawsuit. They argue that the deal occurred over a year before FTX filed for bankruptcy, making the case irrelevant. Binance insists that the lawsuit deflects blame from FTX’s former leadership.
The exchange also pointed to the 25-year sentence of FTX’s founder, Sam Bankman-Fried, as the core issue behind the platform’s collapse. Binance claims FTX misused its customer funds long before the 2021 transaction. Therefore, it believes the FTX estate’s accusations are legally and factually unsupported.
Binance further argues that none of its entities were involved in fraudulent transfers related to the FTX platform. The company says the court lacks jurisdiction because the involved Binance companies operate outside the United States. It also emphasized that no Binance executives were directly linked to the disputed transactions.
FTX Accuses Binance of Triggering Collapse
FTX alleges that Binance’s 2021 equity repurchase was funded through unauthorized use of customer assets. It further claims that the transaction played a significant role in deepening FTX’s financial problems. Binance, however, disputes the source of the funds and denies any prior knowledge of misused assets.
FTX also attributes part of its downfall to public statements made by Binance CEO Changpeng Zhao in November 2022. One such statement included Binance’s decision to sell its FTT holdings, which allegedly triggered user panic. Binance counters that concerns had already surfaced following a CoinDesk article exposing FTX’s balance sheet weaknesses.
Binance argues that Zhao’s tweets responded to market developments and were not an attempt to harm FTX. It believes that blaming Binance for the fallout is misleading and unsupported by concrete evidence. The company maintains that its actions were transparent and did not breach regulations.
Jurisdictional and Repayment Issues Loom
Binance’s lawyers also contend that the Delaware court has no authority over entities that are not U.S.-based. The company highlights that Binance’s lack of direct involvement in customer fund transfers ties Binance to the claims made by FTX.
The $1.76 billion claim forms part of FTX’s broader effort to recover over $11 billion in lost assets. The lawsuit is among several legal actions FTX initiated to reclaim funds on behalf of customers and creditors. Legal outcomes could impact the distribution amounts with repayment processes beginning on May 30.
