Binance has filed a motion in Delaware Bankruptcy Court to dismiss a $1.76 billion lawsuit brought by the FTX estate in November 2024, labeling the claims “legally deficient” and asserting that Binance bears no responsibility for FTX’s collapse.
The filing, submitted on May 16, 2025, marks the latest development in the ongoing legal battle between the two crypto giants.
The lawsuit centers on a 2021 share repurchase deal in which FTX bought back Binance’s 20% stake in its international unit and 18.4% stake in its U.S.-based entity, West Realm Shires, for $1.76 billion in cryptocurrencies (BNB, BUSD, and FTT). FTX alleges that the transaction was funded with misappropriated customer funds at a time when both FTX and its sister company, Alameda Research, were insolvent.
The estate claims the deal should be voided as a “constructive fraudulent transfer.” Additionally, FTX accuses former Binance CEO Changpeng Zhao of triggering its collapse through posts on X in November 2022, which allegedly sparked a massive wave of withdrawals.
Zhao’s announcement of Binance’s plan to liquidate $529 million worth of FTT tokens reportedly caused the token’s value to plummet from $24 to $2.30 in days, exacerbating a liquidity crisis.
The FTX crisis was initially sparked by a CoinDesk investigation into Alameda Research’s balance sheet, which revealed that a significant portion of its assets were tied to FTT tokens. This raised concerns about the exchange’s stability and the safety of user funds.
Zhao’s public statement about selling Binance’s FTT holdings intensified the panic, leading to a surge in withdrawals—jumping from $18 million to $150 million per hour. Shortly after, Zhao announced a non-binding agreement to acquire FTX’s non-U.S. operations but backed out the next day, citing concerns over FTX’s financial health following due diligence.
Within days, FTX froze withdrawals and filed for bankruptcy on November 11, 2022, marking one of the largest crypto exchange failures in history.
Binance counters that FTX continued operating for 16 months after the 2021 deal, undermining claims of insolvency at the time of the transaction. The exchange also argues that Zhao’s posts on X were neither false nor misleading, as they followed CoinDesk’s report exposing FTX’s financial troubles.
Furthermore, Binance asserts that the Delaware court lacks jurisdiction over the case, noting that Binance is not registered in the U.S. and that Zhao was not personally involved in the share repurchase deal.
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This lawsuit is part of FTX’s broader effort to recover assets for creditors, who are owed over $11 billion. The FTX Recovery Trust has announced that a new round of distributions, totaling over $5 billion, will begin on May 30, 2025, through platforms like BitGo and Kraken.
FTX founder Sam Bankman-Fried, convicted of fraud and misappropriation of customer funds, is currently serving a 25-year prison sentence. The case highlights the contentious fallout from FTX’s collapse and raises questions about accountability in the crypto industry’s competitive landscape.
