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Binance and its former CEO, Changpeng Zhao, filed a motion to dismiss FTX’s lawsuit worth $1.76 billion.
The crypto industry continues to feel the effects of the FTX collapse. In a court filing in Delaware dated May 16, Binance and associated entities sought to dismiss the lawsuit brought against them by FTX’s bankruptcy lawyers. Binance cited a lack of jurisdiction and claimed that FTX alone was responsible for its collapse.
The lawsuit, initiated by the FTX Recovery Trust, aims to recover $1.76 billion in assets FTX paid in July 2021 to repurchase equity from Binance. At the time, Binance was one of FTX’s largest investors but later chose to divest from the exchange. In its filing, Binance argued that these funds should be protected in bankruptcy under the “safe harbor†clause, as the transaction involved a securities contract.
The FTX Recovery Trust also alleged that then-Binance CEO Changpeng Zhao contributed to a bank run on FTX through social media posts, which it described as part of a “campaign to destroy FTX.†In response, Binance said the posts were truthful and claimed any suggestion of malicious intent was speculative.
“Of course, Plaintiffs’ only support for this theory is pure conjecture—much of it sourced from a convicted fraudster’s hindsight speculation,†Binance’s court filing about Changpeng Zhao’s alleged attempt to destroy FTX.
Binance’s primary argument rests on the court’s lack of jurisdiction. The exchange noted that all three FTX entities involved are based outside the U.S., specifically in the Cayman Islands and Ireland. Furthermore, Binance contends that these entities were not parties to the repurchase agreements in question.
The filing also asserts that the responsibility for FTX’s downfall lies with its founder, Sam Bankman-Fried. Binance pointed out that the lawsuit itself highlights “pervasive malfeasance,†“ongoing fraud,†and misrepresentation by FTX leadership.
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