Thomas Daniels
Binance has filed a motion to dismiss a $1.76 billion lawsuit initiated by the FTX estate, arguing that the claims are legally baseless and misattribute responsibility for FTX’s collapse. Submitted to the Delaware Bankruptcy Court on May 16, Binance’s legal counsel contends that FTX’s failure stemmed from internal misconduct rather than any actions taken by Binance or its former CEO, Changpeng Zhao.
According to Binance, the FTX estate is attempting to deflect accountability by accusing others, despite former CEO Sam Bankman-Fried’s conviction on seven counts of fraud and conspiracy. The motion asserts that the plaintiff’s case is “legally deficient” and rooted in speculation, not substantiated fact.
Central to the lawsuit is a 2021 buyback agreement, in which FTX allegedly transferred billions in cryptocurrency to Binance, funded improperly with customer deposits. Binance refutes this allegation, emphasizing that FTX remained operational for 16 months following the transaction, indicating no evident insolvency at the time.
The lawsuit also claims that Zhao contributed to FTX’s collapse through a tweet on November 6, 2022, announcing Binance’s decision to liquidate its remaining FTT tokens. Binance counters that Zhao’s tweet was prompted by publicly available concerns—specifically, a media report highlighting vulnerabilities in Alameda Research’s financials. The defense maintains that there is no evidence Binance acted in bad faith or manipulated the market.
Additionally, Binance is challenging the court’s jurisdiction, noting that the named foreign entities are neither incorporated in nor principally based in the United States. The filing criticizes the case as a “grab bag of state law claims” driven by conjecture and the retrospective narrative of a convicted fraudster.
Binance has requested that the court dismiss all claims with prejudice. As of now, the FTX estate has not filed a response.
In parallel, the FTX Recovery Trust has announced plans to distribute over $5 billion in a second round of repayments to creditors, scheduled to commence on May 30. The distributions will be executed via BitGo and Kraken, targeting the second eligible group under FTX’s Chapter 11 reorganization plan. According to the plan, certain creditor groups categorized as “convenience classes” are projected to receive between 54% and 120% of their claims. Overall, the total repayment amount could reach up to $16 billion, contingent on the final tally of validated claims.
