Binance Asks U.S. Court to Dismiss $1.76 Billion Clawback Lawsuit Filed by FTX Estate

Binance has asked a Delaware court to throw out a $1.76 billion clawback lawsuit filed by the FTX estate, arguing that the now-bankrupt crypto exchange is targeting the wrong party.

According to the court documents, Binance says FTX’s collapse stems from internal fraud, not any action it or former CEO Changpeng Zhao took, and that the case fails to meet basic legal standards.

Binance Rejects Claims, Deflects Blame

In a motion filed last week, Binance described FTX’s case as “legally deficient” and lacking any plausible basis. The company pointed to the conviction and 25-year sentence of FTX founder Sam Bankman-Fried, calling the company's downfall “one of the most massive corporate frauds in history.”

Binance has asked a Delaware court to dismiss FTX’s $1.76bn asset recovery suit, calling it “legally untenable,” denying involvement in FTX’s collapse, and arguing the case lacks jurisdiction over the non-U.S. exchange.https://t.co/Tx4w2r7ap4 pic.twitter.com/pKwvMZAPAo

The FTX estate argues the firm was already insolvent at the time and financed the deal using misappropriated customer funds. Binance disputes the charge. It claims FTX continued to operate for over a year following the deal, undermining any assertion of prior insolvency. The exchange also said the lawsuit failed to show that Binance had any knowledge of the source of funds used in the transaction.

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FTX also accused Zhao of using Twitter to undermine confidence in the company, pointing to a November 2022 post in which he said Binance would sell its FTT holdings “due to recent revelations.” The suit suggests that the tweet sparked a surge in withdrawals and a liquidity crisis at FTX.

However, Binance argues that the tweet responded to public reporting, not private knowledge. “The November 2022 tweets were posted in the days following a report by CoinDesk,” Binance said, adding that the complaint “contains no facts” indicating the posts were false or misleading.

Jurisdiction and Legal Boundaries Disputed

Binance further argues that the court lacks jurisdiction over its foreign corporate entities. It said none of the defendants are based in the U.S. or directly conducted the transfers in question.

The clawback suit is one of many filed by the FTX recovery trust to recoup assets following the firm’s high-profile collapse. The bankruptcy left billions in customer funds missing and sent shockwaves through the crypto industry.