Binance challenges FTX's $1.76B lawsuit, denying misuse claims and calling the case legally flawed and overreaching - IcoHolder.

Binance is fiercely contesting a $1.76 billion lawsuit filed by the FTX bankruptcy estate, labeling the claims as legally flawed and factually inaccurate. The dispute traces back to a 2021 transaction where FTX repurchased a 20% stake it had sold to Binance for a mix of BNB, BUSD, and FTT tokens. FTX alleges it was insolvent at the time and misused customer funds to finance the buyback, but Binance’s legal team rejects this, arguing that FTX operated normally for over a year after the deal—contradicting any insolvency claims.

Binance frames the lawsuit as an attempt by FTX to shift blame away from its own collapse, which stemmed from what it calls one of the largest corporate frauds in history, a pointed reference to Sam Bankman-Fried’s criminal conviction. The legal battle also revisits a controversial November 2022 tweet by Binance’s former CEO Changpeng Zhao, which FTX claims accelerated customer withdrawals and hastened its downfall. Binance counters that the tweet was based on publicly available information following a revealing CoinDesk report and denies any intent to destabilize FTX.

Adding to its defense, Binance argues that the U.S. courts lack jurisdiction since its entities are not based in the United States and did not directly manage the relevant transfers. It further claims that certain state-level claims are inappropriate for bankruptcy court review. Binance is pushing to have the case dismissed entirely, while FTX continues efforts to recover billions of dollars and plans to begin a second round of creditor payouts soon. The $1.76 billion dispute remains unresolved, awaiting a decisive ruling.