Binance Founder Challenges $1.76 Billion FTX Clawback in Delaware Court on Jurisdictional Grounds

Changpeng Zhao, founder of Binance, is challenging a $1.76 billion legal claim brought by the FTX bankruptcy estate in a Delaware court. The lawsuit accuses Zhao and Binance of improperly obtaining cryptocurrency assets through a share reacquisition agreement with Sam Bankman-Fried, the former CEO of FTX. Zhao’s legal team is seeking dismissal of the case on the grounds that the Delaware court lacks jurisdiction, as Zhao resides in the United Arab Emirates, and the disputed transactions were conducted internationally. His defense emphasizes that U.S. bankruptcy laws cannot be applied extraterritorially to such cross-border dealings [1].

The FTX estate alleges that the reacquisition deal in July 2021 involved a fraudulent transfer of $1.76 billion worth of crypto assets, which it claims should be clawed back as part of the bankruptcy proceedings. Zhao and his legal representatives, however, argue that the claims are an overreach, asserting that the transactions are not governed by U.S. bankruptcy law and that the court’s jurisdiction is being unconstitutionally extended [1].

This case is another high-profile legal challenge for Zhao, who previously pleaded guilty in 2023 to violating anti-money laundering regulations. His current defense strategy is centered on jurisdictional and constitutional arguments, a tactic also employed by other defendants in similar cases this year [1].

The legal battle highlights the growing regulatory and judicial scrutiny of the crypto industry, particularly in the wake of FTX’s collapse. As courts grapple with the enforcement of clawback claims in cross-border transactions, the outcome of Zhao’s motion could set a significant precedent. If successful, it may influence future enforcement actions and reshape how courts handle similar disputes involving digital assets. It also raises broader questions about the reach of U.S. bankruptcy law in an increasingly globalized financial landscape.

The case continues to attract attention from both legal experts and industry participants, as it could have far-reaching implications for how crypto firms and executives navigate international legal boundaries. As the Delaware court considers Zhao’s request, the resolution of this dispute will likely serve as a key reference point for future litigation in the digital asset sector.

Source: [1] International Trade : Law360 : Legal News & Analysis (https://www.law360.com/internationaltrade)

[2] In Stablecoins We Trust? (https://www.chicagobooth.edu/review/2025/august/in-stablecoins-we-trust)