Binance founder Changpeng Zhao is seeking to dismiss a $1.76 billion lawsuit from FTX, arguing the case lacks legal basis and U.S. jurisdiction.
Key Takeaways
- 1Changpeng Zhao filed a motion to dismiss a $1.76 billion lawsuit filed by the FTX bankruptcy estate.
- 2He claims the deal in question happened outside the U.S. and U.S. bankruptcy laws do not apply.
- 3Zhao denies being a recipient of the disputed crypto funds, calling himself a “nominal counterparty.”
- 4The motion criticizes FTX for trying to blame Zhao and Binance for Sam Bankman-Fried’s fraudulent actions.
What Happened?
Former Binance CEO Changpeng “CZ” Zhao has formally requested a U.S. bankruptcy court to dismiss a $1.76 billion lawsuit filed by FTX. The motion, submitted in Delaware on August 4, argues that the court lacks jurisdiction over Zhao, a resident of the United Arab Emirates, and that the disputed transactions occurred entirely offshore, placing them outside the reach of U.S. law.
The Dispute Over the $1.76 Billion Share Repurchase
The lawsuit stems from a July 2021 deal in which FTX repurchased shares from Binance. According to the FTX bankruptcy estate, the transaction involved the transfer of nearly $1.8 billion worth of cryptocurrency via Alameda Research. FTX now claims the deal was fraudulent, alleging that customer funds were used to finance the buyback despite the exchange’s insolvency.
As part of Binance’s exit from FTX equity last year, Binance received roughly $2.1 billion USD equivalent in cash (BUSD and FTT). Due to recent revelations that have came to light, we have decided to liquidate any remaining FTT on our books. 1/4
,CZ 🔶 BNB (@cz_binance) November 6, 2022
Zhao and his legal team argue that the lawsuit is fundamentally flawed:
- The share repurchase involved entities based in the British Virgin Islands, Ireland, and the Cayman Islands.
- Binance was paid in Binance USD (BUSD) and FTX’s native token (FTT).
- Zhao maintains he did not receive or control the transferred assets and was only a nominal participant in the deal.
Jurisdictional Arguments and Legal Position
Zhao’s motion contends that he is not “at home” in Delaware, and that the U.S. court does not have general or specific jurisdiction over him. His lawyers emphasized that serving U.S. legal counsel on a foreign party is not enough to establish jurisdiction.
He also argued that:
- The complaint’s legal claims do not meet the standards for extraterritorial application.
- The constructive fraud claims do not qualify under the legal definitions tied to federal securities laws.
Zhao Responds to Allegations of Market Manipulation
Zhao also addressed accusations that his social media posts about Binance selling FTT tokens contributed to FTX’s collapse. He denied the claims, stating that his posts were not responsible for a run on FTX, which he described as a “fraudulent enterprise.”
His legal team argued:
“To hold Mr. Zhao liable for FTX’s implosion would be no different than holding a whistleblower liable for the Ponzi scheme she exposed.”
He also reminded the court that Binance initially offered to acquire FTX to cover its shortfall but withdrew from the deal after due diligence.
Multiple Dismissal Requests Filed
Binance itself previously filed a motion in May 2025 to dismiss the same lawsuit, labeling FTX’s case as “legally deficient.” The exchange asserted that the blame lies entirely with Sam Bankman-Fried, who was convicted and sentenced to 25 years in prison for fraud. Two former Binance executives named in the suit, Samuel Wenjun Lim and Dinghua Xiao, have also filed to be removed.
Zhao, who served a four-month sentence in the U.S. for anti-money laundering violations, is now fighting what he claims is an effort by FTX to shift responsibility for its own misconduct.
CoinLaw’s Takeaway
Honestly, I think CZ has a strong case for dismissal here. If everything about the deal was done offshore and the U.S. laws don’t apply, this could be a stretch for the court. Plus, FTX’s new legal team seems to be trying to chase every dollar they can claw back, even if it means casting blame where it might not belong. CZ may not be squeaky clean, but pinning FTX’s fraud on him sounds like a distraction from the real cause: Sam Bankman-Fried’s massive mismanagement.
