Binance Urges Court to Dismiss FTX’s $1.76B Clawback Lawsuit

Popular crypto exchange Binance has asked a Delaware court to dismiss a $1.76 billion clawback lawsuit filed by the FTX estate. The company argues that the case lacks legal ground and jurisdiction.

In its filing, Binance’s legal team claims that FTX is wrongly accusing the exchange and its co-founder, Changpeng Zhao (CZ), of deliberately sabotaging the now-defunct platform. They allege that FTX is trying to shift blame for its collapse by targeting external parties.

FTX’s Claims and Binance’s Defense

Binance’s filing emphasized that Sam Bankman-Fried, FTX’s former CEO, was the central figure behind what the defense described as “one of the most massive corporate frauds in history.” Bankman-Fried has since been sentenced to 25 years in prison for financial crimes.

Meanwhile, the lawsuit centers on a 2021 transaction in which FTX repurchased Binance’s 2019 equity stake using crypto assets such as BNB, BUSD, and FTT. The FTX estate is seeking to recover $1.76 billion from that deal, claiming it was carried out while the company was insolvent and financed with misappropriated customer funds.

Additionally, the FTX estate referenced a November 2022 tweet from Zhao, where he announced Binance’s plan to liquidate its FTT holdings. They allege the post triggered panic among users, causing a flood of withdrawals that hastened the platform’s collapse.

In response, Binance countered these claims by pointing out that FTX remained operational for over a year after the buyback. The company also argued that Zhao’s statements were not misleading and reiterated that Binance is based outside the U.S., with CZ having no direct role in the share sale.

Ongoing Recovery Efforts

The ongoing legal battle is part of FTX’s broader strategy to recover funds for its creditors, who are owed more than $11 billion. The estate is expected to begin repayments starting May 30, 2025.

Separately, Backpack Exchange, created by former employees of FTX and Alameda Research, has started processing withdrawals for former FTX Europe users. As reported by CoinTab, the refund process began on May 12, allowing eligible users to reclaim their Euro-based funds.

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