Binance, the largest cryptocurrency exchange, has filed a motion to dismiss the $1.76 billion lawsuit brought by its fallen rival, FTX. In a sweeping rebuttal, Binance labeled the claims as “legally deficient” and “frivolous,” arguing not only that the case lacks legal merit, but that the U.S. court has no authority over the foreign entities named in the suit.

A Battle Over Billions

At the heart of the dispute is a colossal $1.76 billion share buyback deal from July 2021. FTX, once a leading crypto exchange, paid Binance this sum by using a mix of BNB, BUSD, and FTT tokens to repurchase a 20% equity stake Binance had acquired in 2019. Now, FTX’s bankruptcy estate claims the buyback was funded with misappropriated customer assets, and that FTX was already insolvent at the time, making the deal a “fraudulent transfer” under U.S. bankruptcy law.

Binance, however, categorically rejects these allegations. The company insists FTX operated for another 16 months after the transaction, undermining any claim that it was insolvent in 2021. Binance’s legal team further argues there’s no evidence the exchange knew—or could have known—about the source of FTX’s funds at the time.

Key Defence

One of Binance’s central arguments is that the U.S. court simply has no jurisdiction over the case. The entities named in the lawsuit, including Binance Holdings Limited and related affiliates, are all foreign corporations with overseas headquarters. Binance’s lawyers argued that “General jurisdiction exists only if the entity-defendant is essentially at home in the forum, but Plaintiffs’ own allegations confirm that the BHL Defendants are not ‘at home’ in the US,”. Additionally, Binance points out that the disputed agreements were governed by Hong Kong law, not U.S. law, further weakening the American court’s authority to adjudicate the matter.

Blame Game

Binance’s filing does not mince words when it comes to assigning responsibility for FTX’s collapse. The exchange’s legal team describes the lawsuit as an attempt by FTX to “rewrite the story” of its downfall and shift blame away from its own leadership. They highlight that Sam Bankman-Fried, FTX’s former CEO, is currently serving a 25-year prison sentence for one of the most significant corporate frauds in history.

The FTX estate also accuses Binance’s former CEO, Changpeng Zhao, of contributing to FTX’s collapse by posting a tweet in November 2022 announcing Binance’s intent to liquidate its FTT holdings. The FTX team claims this triggered a surge in withdrawals and a liquidity crisis. Binance counters that Zhao’s tweet was a direct response to public reporting specifically a CoinDesk article revealing troubling links between FTX and Alameda Research and not an act of market manipulation.

What’s Next?

As the legal battle unfolds, the crypto world watches closely. The outcome could set a precedent for cross-border disputes and asset recovery in the digital asset sector. For now, Binance remains steadfast in its position: the lawsuit is baseless, the U.S. court lacks jurisdiction, and the blame for FTX’s collapse lies squarely with its own disgraced leadership.