Binance is trying to get a $1.76 billion lawsuit from the failed crypto exchange FTX thrown out. Binance claims FTX is just trying to avoid responsibility for its own downfall.
Binance's lawyers filed their request on May 16th in Delaware Bankruptcy Court, calling the lawsuit "lacking in legal merit." They argue that FTX collapsed due to internal problems, not because of market manipulation or hostile actions from others.
Binance's filing states that the plaintiffs are ignoring the fact that FTX's demise was a result of one of history's biggest corporate frauds, citing Sam Bankman-Fried's conviction for multiple fraud and conspiracy charges.
FTX's legal representatives claim that Binance received billions in cryptocurrency during a 2021 deal to buy back shares, and that these funds were improperly taken from customer accounts.
Binance disputes this, pointing out that FTX continued to operate for 16 months after the share buyback and that there's no believable argument that FTX was financially unstable at that time.
The lawsuit also blames former Binance CEO Changpeng Zhao, alleging his tweet on November 6, 2022, about selling off FTT tokens, caused FTX's collapse.
Binance countered that Zhao's tweet was based on information that was already public. They specifically referred to a CoinDesk article from November 2, 2022, which revealed issues with Alameda Research's finances.
Binance also defended Zhao's statement that they would try to minimize market impact, arguing that the lawsuit doesn't provide any evidence to suggest Binance didn't intend to do so.
Binance is also challenging the court's authority, stating that none of the foreign entities named in the lawsuit are incorporated or primarily located in the United States, and therefore the court shouldn't have jurisdiction over them.
The filing further criticizes the plaintiff's story as a collection of "state law claims" based on "pure speculation," much of which comes from the "hindsight speculation" of a convicted fraudster.
Binance has requested that the court dismiss all claims permanently. FTX's legal team has not yet filed their response.
FTX is preparing to make its second round of payments, totaling $5 billion, to its creditors, more than two years after declaring bankruptcy.
A notice from the FTX Recovery Trust on May 15 announced that over $5 billion will be distributed starting May 30 through BitGo and Kraken. This payment is for the second group of eligible creditors under FTX's recovery plan.
According to the plan, five categories of creditors, called "convenience classes," are expected to receive between 54% and 120% of what they are owed. In total, FTX might repay up to $16 billion, depending on how many claims are ultimately validated.
