Binance is firmly contesting the $1.76 billion clawback lawsuit filed by FTX’s bankruptcy estate, urging a Delaware court to throw out the case. This legal battle revolves around a 2021 equity buyback deal between the two crypto giants, long before FTX’s dramatic collapse. Binance’s legal team argues that the suit is riddled with jurisdictional flaws and unsupported allegations, painting it as an attempt to divert blame away from FTX’s disgraced founder, Sam Bankman-Fried.
The core of the lawsuit claims that FTX improperly used customer funds to repurchase Binance’s stake in the company. However, Binance’s lawyers strongly reject this accusation, describing it as speculative and lacking concrete evidence. They insist that Binance had no involvement in any wrongdoing or financial mismanagement leading to FTX’s downfall.
In detailed court filings, Binance points the finger back at FTX, accusing the exchange and its founder of orchestrating one of the largest financial frauds in recent history. They stress that Sam Bankman-Fried’s 25-year prison sentence underscores the true cause of FTX’s failure. Binance also emphasizes that neither the company nor its CEO, Changpeng Zhao (CZ), played any role in FTX’s operational or financial troubles. CZ, they argue, was not even directly involved in the 2021 equity transaction that is now under scrutiny.
FTX has also argued that a series of tweets by CZ, particularly one about selling Binance’s holdings of FTT tokens in late 2022, contributed to a user panic that accelerated FTX’s collapse. Binance contests this narrative, stating that these tweets came after a CoinDesk investigation had already exposed troubling financial issues within FTX, thus suggesting the market turmoil was rooted in deeper problems than social media statements.
Another key point in Binance’s defense is their challenge to the court’s jurisdiction. Since Binance operates mainly outside the United States, they argue that Delaware courts do not have authority over the matter, especially considering the complex international structure of their business entities. This jurisdictional objection could prove pivotal in determining whether the lawsuit proceeds.
This lawsuit is a significant piece of FTX’s broader efforts to claw back over $11 billion in assets for creditors and customers who suffered massive losses. As FTX’s bankruptcy proceedings advance, with major payout distributions expected to begin imminently, the outcome of the lawsuit against Binance and CZ may heavily influence how much creditors ultimately recover.
The coming weeks will be critical for FTX’s creditors, as the legal tussle with Binance could shape the financial restitution landscape. For Binance, dismissing the case would mean avoiding a prolonged legal battle and reaffirming their stance of non-involvement in FTX’s notorious collapse. For the crypto community watching closely, this fight is another chapter in the ongoing saga of one of the industry’s most shocking financial failures.
