Binance has filed a motion in a U.S. court to dismiss a $1.76 billion lawsuit brought by bankrupt crypto exchange FTX, arguing that the claims are speculative, lack legal grounding, and fall outside of U.S. jurisdiction.
Binance Challenges Jurisdiction and Legal Standing
In its response, Binance emphasized that the lawsuit should be dismissed due to jurisdictional issues. The company noted that none of the defendants — including Binance Holdings Ltd. (BHL) and former CEO Changpeng Zhao — reside in the United States and that the agreements at the heart of the complaint are governed by Hong Kong law.
“Plaintiffs do not sufficiently allege that any of the BHL Defendants had a reasonable expectation of being haled into American courts in connection with any of the alleged events,” Binance argued.
Additionally, Binance stated that the entities being sued were not parties to the original share purchase agreements involving FTX, further undermining the legal basis of the suit.
Insolvency Claims Dismissed as Hypothetical
FTX alleges that Binance contributed to its financial unraveling by triggering a wave of withdrawals and ultimately a liquidity crisis. Binance countered that FTX’s claim that it was insolvent in July 2021 is unsupported and inconsistent.
“If FTX truly were insolvent as of July 2021, then there was no value left to be ‘destroyed’ in November 2022,” Binance stated. “Plaintiffs are pretending that FTX did not collapse as the result of one of the most massive corporate frauds in history.”
Defending Zhao’s Tweets and FTT Liquidation
Central to FTX’s lawsuit is the allegation that former Binance CEO Changpeng Zhao’s tweets in late 2022 triggered a panic among users and fueled a “bank run” that hastened FTX’s collapse. Binance rejected this narrative, asserting that Zhao’s comments were factually correct and fell well within the bounds of protected speech.
“Plaintiffs come nowhere close to showing how the alleged tweets of a foreign CEO and a foreign trading platform concerning another foreign trading platform can be said to have targeted the U.S.,” the company stated in its motion.
Binance also reiterated that its decision to liquidate its FTT holdings — FTX’s native token — was made out of market risk concerns, not malice. The firm emphasized it was safeguarding its own interests amid growing uncertainty about FTX’s operations.
“Binance was plainly motivated to preserve its own business and make clear the measures it was taking to do so,” the filing reads.
What Comes Next?
As Binance seeks to quash the lawsuit in its entirety, the court’s ruling on jurisdiction and the merits of the motion will be critical in determining whether the case proceeds. FTX, currently undergoing bankruptcy proceedings, is attempting to recover billions of dollars in alleged mismanaged or improperly transferred funds as part of its efforts to repay creditors.
The outcome of this high-stakes legal dispute could reshape liability discussions in the crypto sector, particularly around actions taken in the volatile months leading up to FTX’s collapse in November 2022.
