Binance asserts that FTX is trying to deflect blame for its collapse away from founder Sam Bankman-Fried and toward Binance.
By Parth Dubey
Editor Hamza Tariq
Updated
3 mins read
In a legal rebuttal filed on May 16, crypto exchange Binance asked a Delaware bankruptcy court to dismiss a $1.76 billion clawback lawsuit brought by the FTX estate.
In the documentation, the leading digital asset trading platform accused FTX of rewriting history to deflect blame from its disgraced founder, Sam Bankman-Fried (SBF).
The motion, submitted by lawyers for the world’s largest centralized crypto exchange, calls the lawsuit “legally deficient” and rooted in speculation sourced largely from a “convicted fraudster’s hindsight.”
At the core of the dispute is a 2021 transaction in which FTX repurchased Binance’s 20% equity stake using a mix of crypto assets, including FTX’s native FTT token, BUSD, and BNB.
The FTX estate now claims that the deal was funded with misappropriated customer funds and that the company was already insolvent at the time, an assertion Binance strongly denies.
According to the lawsuit, Binance was unjustly enriched through the $1.76 billion deal and played an active role in FTX’s collapse.
The FTX estate alleges that Binance CEO Changpeng Zhao (CZ) orchestrated a damaging run on the rival platform through a November 2022 tweet announcing the liquidation of FTT holdings.
https://x.com/cz_binance/status/1589283421704290306
The move, it claims, triggered mass withdrawals and pushed the already struggling exchange over the edge.
Binance rejects that narrative outright. In court papers, its lawyers stress that FTX continued operating for 16 months after the 2021 repurchase, suggesting that the deal could not have been the cause of its eventual downfall.
They also say that CZ’s tweet was not a malicious act but a reaction to legitimate market concerns, specifically a Nov. 2, 2022 CoinDesk article that revealed alarming details about Alameda Research’s balance sheet.
Binance’s motion accuses the FTX estate of attempting to “shift the blame” for its spectacular collapse onto external actors. It added that Bankman-Fried, not Binance, was at the helm of what a federal judge has called “one of the most massive corporate frauds in history.”
SBF was sentenced to 25 years in prison earlier this year on seven counts of fraud and conspiracy, after being found guilty of misusing billions in customer funds and lying to investors, regulators, and the public.
Binance’s lawyers argue that the estate is effectively pretending that FTX’s collapse wasn’t the result of internal rot but an outside conspiracy, a claim they say is unsupported by fact or law.
Disclaimer: Coinspeaker is committed to providing unbiased and transparent reporting. This article aims to deliver accurate and timely information but should not be taken as financial or investment advice. Since market conditions can change rapidly, we encourage you to verify information on your own and consult with a professional before making any decisions based on this content.
A crypto journalist with over 5 years of experience in the industry, Parth has worked with major media outlets in the crypto and finance world, gathering experience and expertise in the space after surviving bear and bull markets over the years. Parth is also an author of 4 self-published books.
