Binance and its former CEO Changpeng Zhao (CZ) have filed a motion to dismiss the $1.76 billion lawsuit brought by the FTX Recovery Trust, arguing that the U.S. court lacks jurisdiction and that FTX’s collapse was solely the fault of its own executives.
In a court filing dated May 16 in Delaware, Binance and affiliated entities pushed back against allegations that they played a role in the downfall of the now-defunct crypto exchange. The lawsuit seeks to claw back a $1.76 billion equity buyout FTX paid Binance in July 2021 as part of a repurchase deal. At the time, Binance was one of FTX’s largest early backers.
Binance argues that the repurchase transaction is protected under the bankruptcy “safe harbor” provision, asserting that the deal involved a securities contract and should not be reversed in bankruptcy court. The filing emphasized that none of the three FTX entities named in the case are based in the U.S., but rather in the Cayman Islands and Ireland, further supporting Binance’s claim of lack of jurisdiction.
The FTX Recovery Trust also accused CZ of contributing to a bank run on FTX through public statements and social media posts, calling it part of a “campaign to destroy FTX.” Binance responded by calling the claim “pure conjecture”, pointing to the fact that the lawsuit itself acknowledges fraud and mismanagement within FTX’s leadership, particularly its disgraced founder Sam Bankman-Fried, who is currently serving time for financial crimes.
“The plaintiffs’ theory is built on speculation and hindsight, largely sourced from a convicted fraudster,” Binance wrote in its motion, pushing back strongly against the notion of malicious intent behind Zhao’s statements.
As Binance defends its position in court, the case serves as a high-profile legal clash that may have broader implications for how large financial transactions are treated in crypto bankruptcies.
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