Binance Founder Challenges Jurisdiction in $1.7 Billion FTX Lawsuit

Changpeng “CZ” Zhao, co-founder of Binance, has filed a motion to dismiss a $1.7 billion lawsuit brought by the FTX bankruptcy estate. The estate alleges that Binance and Zhao improperly funded a 2021 share repurchase agreement with Alameda Research and that the transaction constituted a fraudulent transfer [1]. The lawsuit also claims that Zhao contributed to FTX’s collapse through misleading public statements and negative commentary that impacted the value of FTX’s digital assets.

The motion, filed on August 4, 2025, argues that the Delaware court lacks jurisdiction over the case and that the legal service of process was improper. Zhao, who resides in the UAE, was served through US-based counsel, a method his legal team contends does not meet the legal requirements for serving a foreign national [1]. They further note that the key parties and transactions involved—Alameda in the British Virgin Islands, Binance entities in Ireland and the Cayman Islands—were all based overseas. Zhao’s lawyers assert that the applicable statutes do not have extraterritorial application and therefore should not apply in this case [1].

In addition to procedural arguments, Zhao disputes the substantive claims of the lawsuit. He states that the case is without merit and that the FTX estate is attempting to deflect blame for its own collapse. Zhao points out that Binance and FTX had ended their business relationship long before FTX’s 2022 collapse and that the decision to sell Binance’s FTT holdings was made publicly and over a year after the partnership ended [1].

The FTX bankruptcy estate filed the lawsuit in November 2024, seeking to recoup funds under the 2021 agreement. The suit comes amid broader scrutiny of FTX’s business practices and its relationships with other major players in the crypto space. As the legal battle unfolds, it could establish important precedents for how cross-border digital asset transactions are treated under US bankruptcy law.

Zhao’s motion primarily focuses on procedural defenses, aiming to prevent the case from proceeding in Delaware. If successful, the motion would force the FTX estate to either pursue the matter in a more appropriate jurisdiction or reassess its claims [1]. The outcome of the case could have broader implications for future legal actions involving international defendants in the crypto industry, particularly concerning jurisdiction and service of process.