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Binance seeks to dismiss the $1.76 billion FTX recovery lawsuit, describing it as "legally flawed"
Binance described the FTX lawsuit as legally unfounded, blaming the collapse on "one of the largest corporate frauds in history."
May 20, 2025
In summary
Binance requested a Delaware bankruptcy judge to dismiss the $1.76 billion FTX recovery lawsuit, calling it legally flawed and unsupported by the facts.
The exchange claims that the collapse of FTX was the result of a massive fraud orchestrated by its leadership, not the actions of Binance.
Binance also argues that the court lacks jurisdiction over its foreign subsidiaries and that its 2022 tweets were neither false nor misleading.
Binance requested a Delaware bankruptcy judge to dismiss a $1.76 billion lawsuit filed by the FTX entity, stating that the defunct crypto platform is trying to "shift the blame" for its collapse away from founder Sam Bankman-Fried to its competitors.
Binance Holdings Ltd. stated that the complaint is "legally flawed" and cannot reasonably link Binance or its former CEO Changpeng Zhao to the collapse of FTX, in a motion to dismiss filed last Friday.
The filing stated that "the plaintiffs pretend that FTX did not collapse as a result of one of the largest corporate frauds in history," noting that former CEO Sam Bankman-Fried is now serving a 25-year prison sentence for defrauding customers, investors, and lenders.
The lawsuit, filed last November, seeks to recover nearly $1.76 billion in cryptocurrencies that FTX transferred to Binance in July 2021 as part of a stock repurchase agreement.
Binance logo. Image: Maquette.pro/Shutterstock
Binance suspends employee for "misconduct" in trading investigation
Binance suspended one of its employees for allegedly using confidential information from his previous position at the BNB Chain platform to prepare for the launch of a token, according to a statement released on Monday. Binance's internal audit team stated on platform X that the employee's "misconduct" involved "front-running trades using insider information" to achieve illicit profits. Based on its initial investigation, Binance reported that it found evidence that the employee purchased tokens through multiple wallet addresses.
FTX had previously sold a 20% equity stake to Binance in 2019, which it later bought back using a mix of BNB, BUSD, and FTT tokens.
The FTX entity claims that the exchange was insolvent at the time of the deal made in 2021, and that the embezzled customer funds secretly financed the buyback.
However, Binance claims in the motion that FTX "remained a going concern for 16 months" after that, making any claim of prior insolvency implausible.
The lawsuit also claimed that Zhao used Twitter "maliciously" to spark a wave of customer withdrawals, posting on November 6, 2022, that Binance would liquidate its holdings in FTT "due to recent disclosures."
Founder of Binance, Changpeng "CZ" Zhao. Image: Radio Rag
"It's not fun": Binance founder CZ recounts prison experience
Changpeng "CZ" Zhao, founder of Binance and former CEO, said that his time in prison was "terrifying" and "extremely difficult," adding that he wishes it on no one, while acknowledging that the experience ultimately brought him closer to his family. Last year, Zhao was sentenced to four months in the United States after pleading guilty to money laundering violations. As a result, Zhao was forced to resign as CEO of Binance as part of a $4.3 billion settlement between him and the platform and an American author...
Binance wrote, defending the tweets: "The November 2022 tweets were published in the days following a stunning report from CoinDesk that lifted the veil on the FTX interface, and the complaint contains no facts indicating that the tweets were false."
The exchange also stated that the case should be dismissed for lack of personal jurisdiction, stating that none of the defendants have their headquarters in the United States and did not directly participate in the transfers.
The FTX recovery entity has filed several recovery lawsuits to reclaim assets following the platform's collapse, resulting in one of the largest cryptocurrency bankruptcies in history and leaving billions of dollars of customer funds missing.
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