Binance founder Changpeng Zhao, also known as CZ, has filed a motion to dismiss a $1.8 billion lawsuit from the FTX bankruptcy estate, arguing that U.S. courts have no jurisdiction over him. The case centers on a 2021 crypto transaction involving Sam Bankman-Fried and the now-collapsed exchange FTX.
CZ Challenges Delaware Court Jurisdiction
Zhao’s legal team submitted the motion to the Delaware Bankruptcy Court, claiming that the lawsuit is procedurally flawed. They argue that Zhao, a resident of the United Arab Emirates, was improperly served and cannot be sued in Delaware because he has no direct ties to the state.
The filing also asserts that the lawsuit targets extraterritorial transactions that fall outside the court’s reach.
“Mr. Zhao is not amenable to suit in this forum,” the motion states, adding that many of the claims are “legally unfounded” or “outright incoherent.” Zhao’s legal team also joined similar dismissal motions previously filed by other Binance executives.
FTX Seeks to Recover $1.76 Billion
The lawsuit, originally filed in November 2024, aims to claw back $1.76 billion worth of assets linked to a July 2021 equity buyback. At the time, FTX repurchased a 20% stake that Binance held in the company.
According to the FTX estate, the buyback was funded with a mix of FTT tokens and Binance’s BUSD, assets allegedly misappropriated from FTX customer deposits. The estate claims the transfer was fraudulent and is attempting to recover the funds to repay creditors affected by FTX’s dramatic 2022 collapse.
Zhao’s motion argues that he never personally received the disputed assets, saying he was only a “nominal signatory” and not a direct transferee.
Alleged Role in FTX’s Collapse
The lawsuit also accuses Zhao of contributing to FTX’s downfall. A November 2022 tweet by CZ, warning about FTX’s financial health, sparked massive withdrawals and a liquidity crisis that accelerated the exchange’s collapse.
During Sam Bankman-Fried’s criminal trial, former Alameda Research CEO Caroline Ellison testified that Alameda borrowed over $1 billion in customer funds to finance the Binance buyback. Prosecutors alleged that FTX and Alameda were already insolvent before the repurchase.
Legal Battles Following FTX and Binance Turmoil
Bankman-Fried is currently serving a 25-year prison sentence after being convicted of fraud, conspiracy, and money laundering in March 2024.
Zhao also faced legal consequences last year, serving four months in the U.S. after pleading guilty to violating anti-money laundering rules as part of Binance’s $4.3 billion settlement with U.S. regulators. He stepped down as Binance CEO under the agreement.
The Delaware court will now consider Zhao’s motion to dismiss as both crypto giants continue to face the aftermath of one of the industry’s most high-profile collapses.
