Changpeng Zhao seeks to dismiss FTX’s $1.8B clawback lawsuit in Delaware, arguing a lack of U.S. jurisdiction as a UAE resident.
Changpeng Zhao (CZ), the erstwhile CEO of Binance, has submitted a motion to the Delaware bankruptcy court requesting the dismissal of a $1.8 billion FTX lawsuit. The matter revolves around a 2021 share repurchase agreement between Zhao and the exchange. CZ stated that the United States court does not have jurisdiction over him and that he resides in the United Arab Emirates.
Former CEO of Binance Criticizes FTX Lawsuit
The FTX trust alleged that former FTX CEO Sam Bankman-Fried improperly transferred the funds in the $1.8 billion clawback lawsuit. In November 2024, the FTX estate and FTX Digital Markets filed a lawsuit against Binance and several of its executives, challenging a share repurchase agreement from July 2021 that involved Sam Bankman-Fried.
In response, CZ has submitted a motion to the bankruptcy court, requesting that the claims against it be dismissed. Zhao stated in his most recent motion filing:
“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.”
Two Binance executives, Samuel Wenjun Lim and Dinghua Xiao, had requested that the court dismiss them from the litigation in July. Zhao also declared that he was a “nominal counterparty” in this transaction.
The filing also stated that the FTX trust and Digital Markets “nonsensically blame” Zhao and the crypto exchange Binance for Sam Bankman-Fried’s wrongdoing. According to Zhao, the two crypto firms were “briefly business partners,” with Binance holding a 20% stake in FTX before the two companies parted ways due to “personal grievances.” He also mentioned that the equity was subsequently exchanged for cryptocurrency.
Zhao References the Regulations of the Bankruptcy Court
Changpeng Zhao contended in the most recent court filing that the complaint is invalidated and that the bankruptcy procedures are violated by the appointment of US counsel for a foreign defendant. Zhao, currently residing in the United Arab Emirates, also asserted that US bankruptcy law does not conclusively apply to foreign transfers.
The filing also indicates that the FTX trust is attempting to exceed its authority by submitting fraudulent transfer claims on a global scale. Zhao asserted that the allegations of constructive fraud do not satisfy the legal requirements of safe harbor provisions. In April, Zhao also denied allegations that he had connections to the US Federal Reserve.
Zhao recently completed a four-month prison term after pleading guilty to US anti-money-laundering violations. Conversely, Sam Bankman-Fried is currently serving a 25-year sentence for conspiracy and deception.
