Binance Fights Back FTX's $1,76 Billion Claim

Binance has asked a Delaware court to dismiss a $1,76 billion lawsuit from FTX. The cryptocurrency exchange describes the lawsuit as legally flawed and without merit. In my opinion, FTX is doing everything it can to shift the blame for its collapse onto competitors instead of taking responsibility for the mistakes made by its CEO, Sam Bankman-Fried.

In a recent motion to dismiss the case, Binance Holdings Ltd. argues that the complaint contains no plausible reference to the role of Binance or its former CEO, Changpeng Zhao, in the downfall of FTX. They accuse the plaintiffs of pretending that FTX was not bankrupted by one of the largest financial scandals in history. When Sam Bankman-Fried was eventually sentenced to 25 years in prison for fraud, it became clear how much this claim ignored the truth.

The lawsuit, filed last November, seeks to recover approximately $1,76 billion in crypto which FTX had transferred to Binance in July 2021, as part of a share repurchase agreement. FTX previously sold a 2019% stake in the company to Binance in 20, which later bought back the stake using a mix of BNB, BUSD, and FTT tokens.

FTX alleges that Binance was insolvent at the time of the deal in 2021, and that it misused customer funds to fund the agreements. However, Binance disputes these claims in its motion, arguing that FTX had continued to function as an operational company for 16 months, making the claims of insolvency highly unlikely.

Additionally, the lawsuit alleges that Zhao deliberately stoked the Twitter storm by tweeting on November 6, 2022 that Binance would liquidate its FTT holdings, following revelations that exposed the seriousness of the situation at FTX. Binance defends itself by saying that these tweets were factually accurate and contained no falsehoods.

Binance also argues that the court has no jurisdiction over the foreign entities and that the allegations simply cannot be proven. FTX has since filed multiple clawback lawsuits to recover assets following the platform’s collapse, which impacted many and led to one of the largest bankruptcies in crypto history.

It's a world where nothing is certain, and the ongoing battle between these tech companies only begs the question: who is ultimately responsible for the downfall of FTX?

Frequently Asked Questions

Why did Binance ask for FTX's lawsuit to be dismissed?
Binance calls the lawsuit legally flawed and argues that FTX is attempting to shift blame for its collapse onto others, rather than taking responsibility for its own mistakes.

What is the main argument Binance puts forward in its defense?
Binance argues that FTX was not previously insolvent because it was still operational for 16 months after the deal in question. They find it unlikely that it had gone bankrupt before then.

Why did FTX file a lawsuit against Binance?
FTX is seeking to reclaim approximately $1,76 billion worth of crypto transferred to Binance in 2021, claiming it was funded by misuse of customer funds.