Binance has filed a motion in a Delaware bankruptcy court to dismiss a $1.76 billion clawback lawsuit brought by the FTX estate.
Crypto exchange Binance has filed a motion in Delaware bankruptcy court to dismiss a $1.76 billion clawback lawsuit brought by the estate of bankrupt FTX.
The lawsuit, first reported byDecrypt, seeks to recover funds that were transferred to Binance in July 2021 as part of a share repurchase agreement. It follows FTX’s earlier sale of a 20% equity stake to Binance in 2019, which was later bought back using BUSD, BNB, and FTT tokens.
FTX claims that it was insolvent at the time of the 2021 transaction and that misappropriated customer funds were secretly used to finance the repurchase. The estate also alleges that Binance and its former CEO, Changpeng Zhao, contributed to FTX’s collapse, partly through their public statements on social media in November 2022.
However, Binance maintains that the lawsuit is "patently deficient, speculative, and not supported by facts." It describes FTX’s collapse as "one of the most massive corporate frauds in history" perpetrated by its own leadership, adding that former FTX CEO Sam Bankman-Fried is now serving a 25-year prison sentence.
The motion to dismiss states that the U.S. court lacks jurisdiction over Binance's foreign entities and that the disputed agreements were governed by the law of Hong Kong, China. It adds that FTX "remained a going concern for 16 months" after the transaction.
The motion also asserts that Zhao's tweets regarding Binance's liquidation of FTT holdings were accurate, not false or misleading, and that Binance's actions were motivated by market risk, not an intent to harm FTX.
The complaint was filed in November last year as part of FTX’s broader efforts to claw back assets from creditors in its ongoing bankruptcy.
Earlier this year, FTX also sued a British Virgin Islands firm linked to a Chinese cryptocurrency mining company for the alleged theft of $1.3 billion in Bitcoin.
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