The player's rejection comes after Uefa announced that they had opened up a disciplinary case against Busquets.
Real claim that the Barca midfielder called the left-back a "mono" [monkey], although the video footage provided shows Busquets with his hands covering his mouth.
However, the secretary of the Catalan club's board, Toni Freixa, has confirmed that the 22-year-old midfielder denies the accusations, admitting instead that he said Marcelo had a "big nose".
"When they [Real Madrid] showed images from Youtube [on their site], we spoke to the player and he told us the accusations are false, and what he said was 'big nose," he told Barca TV.
Barcelona will submit their arguments to Uefa on Friday, and Freixa is concerned about the outcome.
"We are at an early stage of what could be a great injustice. We hope that Uefa mantain a serious approach and continue, as they have done, to protect the innocent," he added.
If Busquets is to be found guilty of the alleged racism, he could be suspended. It would ultimately result in the defensive midfielder missing the Champions League final at the end of the month.
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