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Former Binance CEO Changpeng “CZ” Zhao is pushing back against a $1.76 billion lawsuit filed by the bankrupt FTX estate, asking a U.S. bankruptcy court to dismiss all claims against him. The motion, filed on Monday in the U.S. Bankruptcy Court for the District of Delaware, argues that the court lacks jurisdiction and that the claims made by the FTX trust are both legally and factually unfounded.
This legal dispute stems from a share purchase agreement signed in 2021, when Binance sold its equity stake in FTX back to the company for $1.76 billion. The FTX estate, now controlled by bankruptcy trustees, argues that the transfer was fraudulent because FTX was already insolvent at the time.
CZ’s Motion to Dismiss
In the motion, CZ stated that he is a resident of the United Arab Emirates and not subject to the jurisdiction of Delaware courts. “The complaint does not establish general jurisdiction because it does not allege that Mr. Zhao is ‘at home’ in Delaware,” the filing reads.
Zhao further argued that the lawsuit holds minimal relevance to the United States, emphasizing that the regulations cited by FTX do not apply outside the country. His legal team stressed that the case is attempting to stretch U.S. law beyond its intended scope, violating legal principles around extraterritorial application.
This is not the first time Binance or Zhao have sought to dismiss the lawsuit. In May, Binance also filed a motion challenging FTX’s claims, asserting that the now-defunct exchange was trying to shift blame for its downfall onto others—particularly CZ and Binance—while deflecting attention from Sam Bankman-Fried’s role.
Background of the Lawsuit
The lawsuit in question was filed by the FTX estate in November 2024. It targets both Binance and CZ, claiming that the 2021 share buyback deal involved funds that should not have been transferred due to FTX’s insolvency.
According to the filing, the FTX trust is seeking to recover the full $1.76 billion amount under bankruptcy law provisions related to fraudulent transfers. The estate alleges that the deal was part of a larger pattern of mismanagement and deception by FTX’s former leadership.
A Binance spokesperson previously called the claims “meritless,” stating that the exchange would vigorously defend itself in court.
Accusations of Shifting Blame
Zhao’s latest motion didn’t hold back, accusing FTX’s legal team of trying to pin its collapse on external actors. “The FTX trust nonsensically blames Mr. Zhao and Binance for the pervasive malfeasance carried out by Sam Bankman-Fried,” the document stated.
It added that many of the legal arguments were incoherent or failed to meet the standards necessary to qualify as valid claims under federal law. Specifically, CZ’s team challenged the notion that the transaction constituted constructive fraud, arguing that the share sale was linked to a securities contract and should be protected under applicable laws.
Legal Trouble on All Sides
The courtroom clash comes as both CZ and Bankman-Fried continue to face the legal consequences of their roles in the crypto industry’s most high-profile failures. CZ has already pleaded guilty to violating U.S. anti-money laundering laws and recently completed a four-month prison sentence.
Meanwhile, Sam Bankman-Fried is serving a 25-year sentence following his conviction on fraud, conspiracy, and other charges tied to FTX’s collapse. The crypto world continues to reckon with the fallout from these two former powerhouses, whose paths are now colliding in bankruptcy court.
What’s Next?
As the motion to dismiss works its way through the U.S. legal system, the broader case remains a flashpoint in the ongoing fallout of the crypto crash that dominated headlines in 2022 and 2023. For now, CZ is arguing that the FTX estate has no legal basis to bring the suit against him, especially in a jurisdiction he claims has no authority over his personal dealings.
If the court accepts his argument and dismisses the case, it could significantly weaken the FTX estate’s efforts to recover funds for creditors. However, if the court allows the case to proceed, CZ and Binance could find themselves facing a prolonged legal battle that revives scrutiny into their past dealings with FTX.
As the legal maneuvering continues, the crypto community is watching closely—aware that the outcome could influence how future cross-border disputes involving digital assets are handled.
