Binance's Co-Founder, CZ, Pushes for the Rejection of a $1.76B Lawsuit Filed by FTX
Binance Holdings Ltd. Co-Founder Changpeng "CZ" Zhao has filed a motion to dismiss a $1.76 billion claim by an FTX trust in the U.S. Bankruptcy Court for the District of Delaware. The lawsuit, which stems from a July 2021 share repurchase deal between Zhao and FTX Founder Sam Bankman-Fried, was filed amid widespread fraud allegations against FTX.
Zhao, who is currently residing in the United Arab Emirates (UAE), argues that the case falls outside American jurisdiction. He contends that the transactions in question were extraterritorial and that the U.S. bankruptcy law does not cover these foreign transfers. Zhao describes himself as a "nominal counterparty" in the transaction and accuses the trust of wrongly blaming him and Binance for Sam Bankman-Fried’s misconduct and FTX’s collapse.
The FTX trust alleges that the funds were improperly transferred by Alameda Ltd., a British Virgin Islands entity linked to FTX. The funds are alleged to have been transferred to Binance and its executives, which the trust claims destabilized FTX. However, Zhao maintains that the relationship between Binance and FTX ended before the collapse, and he denies responsibility for the mismanagement attributed to Bankman-Fried.
Zhao's legal team at Baker & Hostetler LLP argued that serving U.S. counsel on a foreign defendant is improper. They also asserted that safe harbor provisions under federal law protect qualifying securities-related transactions from such claims. The motion, filed on August 4, 2025, also invokes safe harbor protections, suggesting the complaint fails under those provisions.
Two former Binance executives, Samuel Wenjun Lim and Dinghua Xiao, also sought dismissal in July. The FTX trust is expected to argue jurisdiction based on billions of dollars that passed through U.S. accounts and the related phone calls and wire transfers, which they contend establish jurisdiction under longstanding legal principles.
The lawsuit remains ongoing. Zhao is represented by Baker & Hostetler LLP, while the FTX trust is represented by White & Case LLP and Richards, Layton & Finger PA.
Meanwhile, Sam Bankman-Fried, the founder of FTX, is currently serving a 25-year prison sentence. The collapse of FTX has led to a significant shakeup in the cryptocurrency industry, with many investors seeking answers and justice. The outcome of this lawsuit could have far-reaching implications for the future of the industry.
References:
- Bloomberg
- CoinDesk
- The Block
- Decrypt
Cryptocurrency executives continue to face legal challenges in the aftermath of the FTX collapse, with Binance Holdings' Co-Founder Changpeng Zhao filing a motion to dismiss a $1.76 billion claim, citing foreign transactions and American jurisdiction restrictions. The widespread fraud allegations against FTX have impacted the business and technology sectors, causing concern for investors in the cryptocurrency industry.
Zhao's legal team asserts that safe harbor provisions under federal law protect qualifying securities-related transactions from such claims, implying that the nature of the cryptocurrency finance system may play a significant role in the case's outcome. The court's decision could have far-reaching implications for the future of the cryptocurrency industry, affecting the business, technology, and finance sectors.
