Key Takeaways
- Changpeng Zhao filed a motion to dismiss a $1.7 billion lawsuit filed by an FTX trust related to a share repurchase agreement.
- The lawsuit alleges Binance and its executives received improper funds, but Zhao contests US jurisdiction and claims legal deficiencies.
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Changpeng “CZ” Zhao, the co-founder of Binance, has filed a motion to dismiss a lawsuit from FTX’s bankruptcy estate, which is seeking to claw back $1.7 billion tied to a 2021 share repurchase agreement, according to a new report from Bloomberg Law.
In November 2024, FTX’s bankruptcy estate sued Binance and CZ, alleging that their 2021 share buyback deal was improperly funded by Alameda Research and amounted to a fraudulent transfer.
The lawsuit also accuses CZ of destabilizing FTX through misleading tweets and negative media comments, particularly concerning FTX’s digital assets which the entity believes contributed to its financial collapse.
In a motion dated August 4, CZ argued that FTX’s lawsuit against him should be tossed because the court lacks jurisdiction and the service was improper. His lawyers said FTX wrongly served him through US-based counsel, which doesn’t meet the legal requirements for serving a foreign national like CZ, who lives in the UAE.
They also claim the case doesn’t belong in Delaware because the key parties and transactions, Alameda in the BVI, Binance entities in Ireland and the Cayman Islands, are all based overseas.
“The claims are so far removed from Delaware, and even the United States, that the statutes at issue, which lack extraterritorial application, do not even apply,” Zhao said in a statement.
Beyond procedural objections, Zhao argued that the case lacks merit. He said FTX, a failed enterprise built by Sam Bankman-Fried, who is now in prison, is trying to shift blame for its collapse onto Binance.
While Binance and FTX were briefly business partners, they separated long before FTX’s downfall. Zhao claimed that the decision to sell Binance’s FTT holdings was made publicly and over a year after ending the partnership.
FTX has taken legal action against its former allies in Delaware bankruptcy court, targeting Anthony Scaramucci, Crypto.com, Bybit, KuCoin, and the Mark Zuckerberg–linked political group FWD.US, as it seeks to recover as much lost capital as possible.
The now-defunct exchange plans to issue its third round of creditor repayments starting September 30.
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