Binance Pushes to Dismiss FTX's $1.76B Lawsuit, Calling It Factually and Legally Flawed.

The case ties back to a 2021 buyback deal and CZ's infamous 2022 tweet. Binance argues FTX's collapse was due to internal fraud and not external blame.

Binance is pushing to dismiss FTX’s $1.76 billion lawsuit, arguing it’s flawed and ties to a 2021 buyback deal and former CEO Changpeng Zhao’s tweet.

Another day, another crypto lawsuit. But this time, Binance is pushing back hard against a $1.76 billion lawsuit from the FTX estate, calling the case legally flawed and factually off-base.

The case, which was filed in December, ties back to a 2021 deal where FTX bought back a 20% stake it had previously sold to Binance for roughly $1.76 billion in BNB, BUSD, and FTT tokens. FTX now claims it was already insolvent at the time and used customer funds to finance the buyback.

However, Binance’s lawyers say that theory doesn’t hold up, arguing that FTX continued running its business for more than a year after the deal – hardly the behavior of a company already in collapse.

The filing calls the suit an attempt to rewrite the story and ignore that FTX’s downfall stemmed from “one of the most massive corporate frauds in history.” This is clearly a not-so-subtle nod to Sam Bankman-Fried, who’s now serving 25 years in prison for defrauding customers and investors.

The case will also follow former Binance CEO Changpeng Zhao’s tweet on November 6, 2022, where he announced that Binance would liquidate its FTT holdings, citing “recent revelations.” That tweet, according to FTX, sparked a wave of customer withdrawals and helped tip the platform over the edge.

But Binance says the tweet was based on public information – specifically the CoinDesk article that exposed Alameda’s shaky finances – and they’re not buying the idea that a single post caused the collapse. The motion argues there’s nothing to suggest Zhao was lying or trying to tank FTX.

“The November 2022 tweets were posted in the days following a bombshell report by CoinDesk that blew the lid off of FTX’s facade, and the complaint contains no facts to suggest that the tweets were false or that any of the statements in the tweets were material or substantial,” Binance wrote, defending the tweets.

The filing continues: “Indeed, the tweets were patently responsive to a significant public development—the CoinDesk article about Alameda Research’s risky and under-capitalized operations.”

Furthermore, Binance says the case shouldn’t even be heard in a U.S. court as its corporate entities aren’t based in the States and didn’t handle the transfers directly. The filing also leans on safe-harbor rules and says state-level claims don’t belong in bankruptcy court.

For now, Binance wants the whole case tossed out. FTX, meanwhile, is continuing its broader effort to claw back billions in assets and is preparing to pay out $5 billion to creditors in a second round of repayments starting May 30.