Binance Founder Challenges $1.76B FTX Clawback Suit Over Jurisdiction and Offshore Structure

Changpeng Zhao, co-founder of Binance, has filed a motion in a U.S. bankruptcy court to dismiss a $1.76 billion clawback lawsuit brought by the FTX bankruptcy estate. The lawsuit, initiated by the FTX trust, alleges that the 2021 share repurchase deal between FTX and Binance improperly transferred $1.76 billion from FTX to Binance through Alameda Research. Zhao argues that U.S. courts lack jurisdiction due to his current residency in the United Arab Emirates and the offshore nature of the entities involved in the transaction [1].

In his motion, Zhao highlights the structure of the deal, which involved entities based in the British Virgin Islands, Ireland, and the Cayman Islands. He contends that U.S. bankruptcy law does not apply to such offshore transactions and that the court cannot establish jurisdiction over him [2]. Zhao’s legal team further criticizes the FTX estate’s use of U.S. legal counsel as an attempt to improperly assert jurisdiction over a non-resident foreign individual. Zhao described himself as a “nominal counterparty” in the transaction and accused the lawsuit of attempting to hold him personally accountable for FTX’s internal failures [3].

The motion aligns with similar legal moves by former Binance executives, who also sought to be removed from the case in late July 2025. This case adds to a series of legal challenges stemming from the 2022 collapse of FTX, which triggered a global crisis in the cryptocurrency industry. In 2024, the FTX estate filed a separate lawsuit against Binance and Zhao, alleging reputational damage and seeking further financial recovery. Zhao has also faced other U.S. legal issues, including a guilty plea to anti-money laundering violations and a four-month prison sentence [4].

The case represents a significant test of U.S. jurisdiction in international crypto disputes. If the court rules in Zhao’s favor, it could set a precedent for how courts handle similar cases involving offshore transactions and non-resident defendants. The outcome will also influence the broader perception of accountability in crypto exchanges and the enforceability of U.S. bankruptcy laws in cross-border digital asset cases [5]. The Delaware court has yet to rule on the motion, leaving the future of the $1.76 billion claim uncertain.

Market data, however, suggests that investor sentiment remains largely unaffected by the legal developments. BNB, the native token of Binance, traded at $761.83 as of August 6, 2025, with a 2.85% market dominance and a 90-day price increase of 23.69%. Analysts have noted that Zhao’s legal strategy may refine the landscape of international crypto litigation and influence future regulatory frameworks for asset recovery [6].

The legal battle underscores the complex interplay between jurisdiction, international law, and the evolving nature of cryptocurrency transactions. As courts grapple with these challenges, the case may shape the future of asset recovery in the digital asset space and redefine the boundaries of legal accountability in the global crypto ecosystem [7].

Sources:

[1] CCN.com, [https://www.ccn.com/news/crypto/changpeng-zhao-wants-out-nonsensical-ftx-clawback-case/](https://www.ccn.com/news/crypto/changpeng-zhao-wants-out-nonsensical-ftx-clawback-case/)

[2] AInvest, [https://www.ainvest.com/news/binance-founder-challenges-1-76b-ftx-lawsuit-jurisdiction-procedural-flaws-2508/](https://www.ainvest.com/news/binance-founder-challenges-1-76b-ftx-lawsuit-jurisdiction-procedural-flaws-2508/)

[3] The, [https://www.cryptotimes.io/2025/08/06/binance-co-founder-cz-seeks-dismissal-of-1-76b-ftx-claim/](https://www.cryptotimes.io/2025/08/06/binance-co-founder-cz-seeks-dismissal-of-1-76b-ftx-claim/)

[4] X, [https://x.com/mpost_io/status/19529949134****0596](https://x.com/mpost_io/status/19529949134****0596)

[5] Crypto News, [https://crypto.news/cz-dismissal-ftx-1-76b-clawback-lawsuit-delaware-2025/](https://crypto.news/cz-dismissal-ftx-1-76b-clawback-lawsuit-delaware-2025/)

[6] CoinMarketCap, [https://coinmarketcap.com/community/articles/689322e61c2c1e490438c9f7/](https://coinmarketcap.com/community/articles/689322e61c2c1e490438c9f7/)

[7] AInvest, [https://www.ainvest.com/news/binance-zhao-challenges-1-76-billion-ftx-clawback-suit-jurisdiction-offshore-structure-2508/](https://www.ainvest.com/news/binance-zhao-challenges-1-76-billion-ftx-clawback-suit-jurisdiction-offshore-structure-2508/)