Binance Moves to Dismiss $1.76B FTX Lawsuit, Says SBF’s Fraud Caused Collapse

Binance is seeking to dismiss a $1.76 billion lawsuit brought by the FTX estate, asserting that the failed crypto exchange is attempting to shift responsibility for its own mismanagement and fraud. In a court filing made on May 16 in the Delaware Bankruptcy Court, Binance labeled the lawsuit “legally deficient” and “conjectural,” arguing it has no factual or legal foundation.

Binance: FTX Collapsed Due to Fraud, Not Us

At the center of Binance’s dismissal motion is the claim that Sam Bankman-Fried (SBF), the disgraced former CEO of FTX, is to blame for the platform’s demise — not Binance or its former CEO Changpeng "CZ" Zhao.

“Plaintiffs are pretending that FTX did not collapse as the result of one of the most massive corporate frauds in history,” Binance stated, citing SBF’s conviction on seven felony counts of fraud and conspiracy in 2023.

The $1.76 Billion Buyback Dispute

FTX alleges that Binance unfairly benefited from a 2021 share buyback deal, during which it received billions in crypto supposedly funded through misused FTX customer assets.

Binance countered that FTX remained a functioning company for 16 months after the deal, suggesting it was solvent at the time and that there’s no plausible legal claim that the transaction contributed to FTX’s bankruptcy.

Binance filing to dismiss FTX’s lawsuit against the exchange. Source: Law360news

CZ’s Tweet Under Fire — Again

A core accusation from FTX is that Zhao’s November 6, 2022 tweet, in which he announced that Binance would liquidate its remaining holdings of FTT (FTX’s native token), helped trigger a panic sell-off that led to FTX’s collapse.

Binance defended the tweet, stating it was based on publicly available concerns, specifically referencing a November 2, 2022 CoinDesk article revealing troubling details about Alameda Research’s balance sheet, a sister firm to FTX.

“Binance’s decision to liquidate its remaining FTT was, in fact, ‘due to recent revelations,’” the filing said, arguing Zhao even stated his intention to minimize market impact.

Jurisdiction and Legal Grounds Challenged

Binance’s legal team also questioned the Delaware court’s jurisdiction, arguing that none of the foreign entities named in the suit are based in the United States. This, Binance claimed, puts them outside the court’s legal reach.

Additionally, the company criticized FTX’s legal arguments as “a grab bag of state law claims” based on “pure conjecture” and speculative hindsight — much of it from a “convicted fraudster.”

Binance has asked the court to dismiss all claims with prejudice, which would prevent FTX from refiling the lawsuit. The FTX estate has not yet responded to the motion.

CZ announced plans to liquidate FTT holdings in 2022. Source: CZ

FTX Begins $5 Billion Repayment Round

Meanwhile, FTX has announced a second round of creditor repayments. On May 15, the FTX Recovery Trust stated that more than $5 billion will be distributed beginning May 30, processed via BitGo and Kraken.

The funds will be sent to creditors in the second eligible group under the bankruptcy reorganization plan. In total, FTX expects to repay as much as $16 billion, depending on the final tally of validated claims.

The five creditor classes — categorized as “convenience classes” — could receive between 54% to 120% of their claims, offering a rare full or partial recovery in a crypto bankruptcy of this scale.

Outlook

As Binance defends itself from FTX’s claims and seeks to close the door on legal action tied to the exchange's collapse, the broader legal saga surrounding crypto’s most high-profile bankruptcy continues to unfold — with billions still in play and regulatory scrutiny far from over.