The bitter legal feud between Binance and FTX’s bankruptcy estate has taken a dramatic turn, with Binance filing a motion to dismiss the $1.76 billion lawsuit, squarely blaming Sam Bankman-Fried (SBF) for FTX’s catastrophic collapse. The Binance FTX lawsuit has become a focal point in the crypto industry, exposing deep fractures and allegations of misconduct.
Binance argues FTX’s collapse was “self-inflicted”
In a May 16 filing in Delaware Bankruptcy Court, Binance’s legal team dismissed FTX’s claims as “legally deficient,” asserting that the exchange’s downfall resulted from internal fraud, not from Binance’s actions.
“Plaintiffs are pretending that FTX did not collapse as the result of one of the most massive corporate frauds in history,” the filing stated, referencing SBF’s conviction on seven counts of fraud and conspiracy.
The Binance FTX lawsuit centers on allegations that Binance and former CEO Changpeng Zhao (CZ) played a role in FTX’s implosion by manipulating markets and withdrawing from a 2021 share buyback deal. Binance, however, insists that FTX remained operational for 16 months after the deal, undermining claims of immediate insolvency.
The tweet that triggered a meltdown
FTX’s lawsuit accuses CZ of deliberately destabilizing the exchange when he announced Binance would liquidate its FTT holdings in a November 2022 tweet. The move allegedly triggered a bank run, but Binance counters that the decision was based on legitimate concerns.
“Binance’s decision to liquidate its remaining FTT was, in fact, ‘due to recent revelations’—in particular, the November 2, 2022, CoinDesk article,” the filing read, referring to the explosive report exposing Alameda Research’s shaky financials.
Legal experts suggest the Binance FTX lawsuit could set a precedent for how courts handle crypto-related corporate disputes. “This case isn’t just about Binance and FTX—it’s about accountability in an industry still struggling with transparency,” said Eleanor Terrett, a Fox Business correspondent covering the trial.
FTX’s repayment plan offers hope for creditors
Amid the legal wrangling, FTX’s bankruptcy estate is moving forward with creditor repayments. A May 15 notice revealed that over $5 billion will be distributed starting May 30, with some creditors expected to recover up to 120% of their claims.
John Ray III, FTX’s current CEO, has been vocal about the challenges of recovering lost funds.
“We are doing everything possible to maximize returns for creditors, but the road ahead is complex,” he said in a recent statement.
The Binance FTX lawsuit, however, could complicate these efforts. If successful, FTX’s estate may secure additional funds from Binance, but legal analysts remain skeptical.
“Proving market manipulation in court is notoriously difficult, especially in crypto,” noted Bloomberg’s senior litigation analyst, Matt Levine.
What’s next in the Binance FTX lawsuit?
Binance has requested the court dismiss all claims with prejudice, arguing that the lawsuit relies on “pure conjecture—much of it sourced from a convicted fraudster’s hindsight speculation.” Meanwhile, FTX’s legal team has yet to respond.
The outcome of the Binance FTX lawsuit could have far-reaching implications, not just for the two exchanges but for the broader cryptocurrency regulatory landscape. As victims await repayments and regulators scrutinize the case, one thing is clear: the fallout from FTX’s collapse is far from over.
With billions at stake and reputations on the line, the Binance FTX lawsuit remains one of the most closely watched legal battles in crypto history. Whether Binance succeeds in dismissing the case—or FTX secures a massive payout will shape the industry for years to come.
Key points:
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Binance denies responsibility for FTX’s collapse, calling the lawsuit “legally deficient.”
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CZ’s FTT liquidation tweet is central to FTX’s claims, but Binance argues it was justified.
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FTX’s repayment plan is moving forward, but the lawsuit could impact recovery efforts.
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Legal experts warn that the Binance FTX lawsuit could influence future crypto regulations.
As the drama unfolds, the crypto world watches closely, knowing that the final verdict could redefine accountability in the digital asset space.
