Cryptocurrency exchange Binance has filed a motion seeking the dismissal of a $1.76 billion lawsuit brought against it by the bankrupt FTX platform. FTX’s claim alleges that a significant share repurchase deal between the two companies was fraudulent and funded improperly with customer assets. Binance, in its legal filing, contends that the lawsuit is baseless and represents an attempt by FTX’s current management to deflect blame for the exchange’s collapse, attributing it instead to former CEO Sam Bankman-Fried, who has since been convicted.
FTX’s Allegations
FTX initiated the lawsuit against Binance in November 2024. At the core of their complaint is the $1.76 billion transaction where FTX bought back equity stakes previously held by Binance. FTX asserts this buyback was tainted by fraud because it was financed using client funds.
The history between the two firms includes Binance’s initial investment in FTX, acquiring a 20% stake in 2019, followed by a further investment in FTX’s U.S. affiliate, West Realm Shires (WRS), the following year. Both these early investments were reportedly made using Binance’s native token, BNB.
In July 2021, FTX repurchased these equity positions from Binance. During the criminal trial of Sam Bankman-Fried, evidence suggested that FTX utilized customer deposits to fund this buyback, among other expenditures. FTX’s lawsuit argues that the 2021 transaction should be undone because Alameda Research, the trading firm closely linked to FTX, was allegedly already insolvent at the time of the deal. Furthermore, FTX claims that public statements made by Binance’s then-CEO, Changpeng Zhao, deliberately worsened FTX’s financial situation, contributing to its eventual downfall.
Binance’s Defense
Binance’s motion to dismiss strongly pushes back against FTX’s claims. The exchange argues that the lawsuit is a tactic to “shift blame” for FTX’s insolvency away from Bankman-Fried and onto Binance and its founder. Binance posits that the lawsuit lacks legal merit and that the case should not fall under U.S. jurisdiction.
In its filing, Binance states, “Plaintiffs pretend that the collapse of FTX was not the result of one of the largest corporate frauds in history.”
Regarding the controversial share repurchase, Binance highlights that FTX continued to operate successfully for 16 months following the completion of that deal. Binance also contends there was no concrete evidence at the time of the transaction to suggest FTX was insolvent.
Addressing the accusations concerning Changpeng Zhao’s social media activity, specifically his November 2022 posts on X (formerly Twitter) which allegedly triggered panic, Binance asserts these statements were based on publicly available information, including reporting by CoinDesk. Binance further notes that CZ was not personally involved in the 2021 equity sale transaction and therefore cannot be held liable as a defendant in this specific claim. The motion also references and dismisses Bankman-Fried’s trial testimony alleging Binance leaked a report on Alameda’s financial health, calling it “unsubstantiated claims based on the guesses of a convicted criminal.”
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