Binance Seeks Dismissal of $1.76 Billion FTX Lawsuit Blaming Internal Fraud

Binance, one of the world’s largest cryptocurrency exchanges, has formally requested a U.S. court to dismiss a $1.76 billion lawsuit filed by the FTX estate. The bankruptcy case, initiated in the Delaware Bankruptcy Court on May 16, 2025, alleges that Binance is responsible for the downfall of FTX. Binance’s legal team argues that the lawsuit lacks legal grounds and is an attempt to shift blame for FTX’s failure onto external parties.

Binance contends that the collapse of FTX was primarily due to internal issues and fraudulent activities within the company, rather than any external interference or pressure. The company points to the fraud committed by Sam Bankman-Fried, the former founder and CEO of FTX, who is currently incarcerated for defrauding investors, customers, and lenders. Binance’s legal documents emphasize that the downfall of FTX was one of the largest fraud incidents in history, and that the company’s internal mismanagement and fraudulent activities were the root causes of its demise.

The lawsuit, which began in November 2023, seeks to recover $1.76 billion in crypto assets. In July 2021, FTX required funds from Binance to repurchase a 20% stake in the business that it had previously sold in 2019. According to the FTX estate, this repurchase was conducted using misappropriated customer funds, as FTX had no remaining funds at the time. Binance, however, disputes this narrative, asserting that FTX continued to operate for 16 months after the 2021 transaction, which contradicts the claim that FTX was insolvent at that time. Binance also maintains that it was unaware that the funds used in the transaction were allegedly stolen from customers.

Binance’s legal officials further assert that the deal in question was not fraudulent on their part. The company argues that U.S. courts lack jurisdiction over the Binance entities involved, as they operate abroad. Additionally, Binance emphasizes that none of its executives were involved in the disputed transaction, further distancing itself from any wrongdoing.

FTX, on the other hand, accuses Binance of exacerbating its financial troubles. FTX claims that the 2021 buyback deal and statements made by Binance’s chief executive, Changpeng Zhao, worsened its financial situation. In November 2022, Zhao announced that Binance would liquidate its FTT holdings, which reportedly caused panic among users. Binance, however, defends its actions, stating that Zhao’s remarks were a response to concerns raised by a media article about FTX’s financial health. Binance insists that the decision to sell FTT was driven by risk management rather than malicious intent.

In summary, Binance vehemently denies all allegations made in the $1.76 billion lawsuit, attributing FTX’s collapse to internal fraud rather than external actions. By filing this motion, Binance aims to clear its name and protect its reputation, while also seeking to avoid unjust blame for one of the crypto industry’s most significant failures. The outcome of this legal battle will determine who is held accountable for the collapse of FTX and the broader implications for the cryptocurrency industry.