Binance and former CEO Changpeng Zhao have filed to dismiss FTX's $1.76 billion lawsuit.
The cryptocurrency industry continues to feel the impact of the FTX collapse. In court filings in Delaware on May 16, Binance and related entities sought to dismiss the lawsuit filed by FTX's bankruptcy lawyers. Binance cited a lack of jurisdiction and stated that only FTX itself is responsible for its collapse.
The lawsuit initiated by the FTX Recovery Trust aims to recover $1.76 billion in assets that FTX paid in July 2021 to acquire equity from Binance. At that time, Binance was one of FTX's largest investors but later chose to divest from the exchange. In the filed documents, Binance argues that these funds should be protected in the event of bankruptcy under the 'safe harbor' provision, as the transaction involved a securities contract.
FTX Recovery Trust also alleges that then-CEO of Binance, Changpeng Zhao, contributed to a massive withdrawal from FTX through social media posts, described as part of a 'campaign to destroy FTX.' In response, Binance stated that the posts were factual and claimed that any suggestion of ill intent was speculation.
"Of course, the Plaintiff's sole support for this theory is pure speculation—largely stemming from the late speculation of a convicted fraudster," according to Binance's court filing regarding the allegations that Changpeng Zhao attempted to destroy FTX.
Binance Cites Lack of Jurisdiction, Blames FTX for Collapse
Binance's main argument is based on the court's lack of jurisdiction. The exchange notes that all three related FTX entities are based outside the United States, specifically in the Cayman Islands and Ireland. Furthermore, Binance argues that these entities are not parties to the acquisition agreements in question.
The filings also assert that the responsibility for FTX's collapse lies with founder Sam Bankman-Fried. Binance points out that the lawsuit itself highlights 'widespread fraudulent behavior,' 'ongoing fraud,' and the misrepresentation by FTX's management.
