- Binance claims FTX’s collapse was due to internal fraud, not its actions.
- FTX lawsuit seeks $1.76B, alleging misuse of customer funds in the buyback.
- Binance claims the court lacks jurisdiction over its foreign subsidiaries.
Binance has filed a request for the dismissal of FTX’s $1.76 billion lawsuit, claiming it has no legal basis. The exchange claims that FTX failed because of internal fraud, not because of it or its executives. According to the exchange, Sam Bankman-Fried and the FTX leadership are the main reasons for the company’s failure.
FTX’s bankruptcy estate filed the lawsuit to recover the funds that were transferred to Binance in 2021. FTX lawsuit said that the exchange received about $1.76 billion in crypto as part of a share repurchase agreement. FTX says it was insolvent at the time and that the money from customers’ accounts was used to buy back the company.
Binance Defends its Subsidiaries and Zhao in FTX Case
Binance terms these claims are false because FTX continued to operate for over 16 months after the transaction. The report also notes that FTX’s financial state did not decline right after the repurchase. The exchange believes that the lawsuit is based on weak evidence and should be dropped for that reason.
The defense further repudiates accusations that the exchange contributed to the collapse of FTX. The lawsuit accuses Binance CEO Changpeng Zhao of maliciously using Twitter to cause panic withdrawals. The exchange argues that Zhao’s November 2022 tweets were made in response to a CoinDesk report that revealed critical issues at FTX.
The exchange further argues that the court lacks jurisdiction over Binance and its foreign subsidiaries. It claims that none of the corporate entities involved are based in the U.S. As such, it contends that U.S. courts cannot hear the case due to the lack of direct engagement in the transfers.
FTX Initiates Lawsuits to Recover Funds
FTX’s recovery trust initiated several lawsuits to recover assets lost as a result of the company’s collapse. The collapse of the exchange led to the loss of billions of customer funds. Binance’s lawyers argue that the FTX’s bankruptcy was caused by fraudulent activity within FTX and actions from the exchange.
Binance points out that the lawsuit’s legal theory is incorrect. It states that FTX was not insolvent when the July 2021 transaction took place, since it still operated afterwards. The exchange believes the focus should be on FTX’s leadership and not on its competitors.
The decision on this case will affect the exchange and the entire crypto industry. The motion to dismiss is a major event after FTX’s collapse.
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