Binance co-founder Changpeng Zhao (CZ) has initiated a legal move to dismiss a $1.76 billion lawsuit filed by the FTX bankruptcy trust against him.
Zhao argues that since he resides in the United Arab Emirates (UAE), the court lacks jurisdiction over him.
CZ’s Legal Argument
Per a recent Bloomberg report, Zhao’s legal representatives submitted a dismissal request to the U.S. Bankruptcy Court in Delaware, stating that the court lacks jurisdiction over the accusations.
“These claims are so distanced from Delaware—and indeed the entire U.S.—that the statutes in question, which do not have an extraterritorial scope, are inapplicable,” his lawyers stated in their motion.
The lawsuit, filed in November 2024, alleges that Zhao, Binance, and some former company leaders received funds improperly transferred by FTX’s founder, Sam Bankman-Fried (SBF). The case centers on a transaction from July 2021 where Binance sold back its shares in both FTX’s global and U.S. divisions. The trust claims Binance owned 20% of FTX’s international branch and 18.4% of its American counterpart.
According to court documents, a British Virgin Islands-based company, Alameda Ltd, facilitated fund transfers for FTX. Meanwhile, the involved Binance entities were based in Ireland, the Cayman Islands, and the British Virgin Islands. Zhao’s legal team contends that this categorizes the deal as a foreign transaction, beyond the jurisdiction of U.S. bankruptcy laws. Furthermore, they assert Zhao was merely a “nominal counterparty,” indicating he had limited involvement in the deal.
Zhao also highlighted the short-lived nature of Binance’s relationship with FTX, which ended due to personal conflicts, resulting in Binance’s FTX equity being exchanged for cryptocurrency.
The cryptocurrency tycoon contends that the lawsuit unjustly attributes FTX’s collapse to him and Binance, which he claims was actually due to SBF’s misconduct. He also criticized the method of delivering legal documents through U.S.-based attorneys, arguing it’s invalid when the defendant is overseas. His legal team maintains that the trust is attempting to expand its claims beyond the U.S. in a manner not upheld by law, emphasizing that the fraud allegations fail to meet the criteria for federal securities contract protection.
Efforts by Former Executives to Exit the Case
Recently, former Binance executives Samuel Wenjun Lim and Dinghua Xiao, who are co-defendants in the FTX lawsuit, also filed motions to be dropped from the case.
CZ had completed a four-month jail term in September of the previous year after admitting to U.S. anti-money-laundering breaches. On the other hand, Sam Bankman-Fried is currently serving a 25-year sentence for fraud and conspiracy.
In related news, the now-defunct exchange announced plans to commence the next round of creditor claim distributions on September 30. By August 2025, approximately $6.2 billion had been reimbursed to former customers in two significant rounds.
