Binance Founder Seeks Dismissal of FTX's $1.8B Clawback Lawsuit

Changpeng Zhao, founder of Binance, has filed a motion in a Delaware bankruptcy court seeking dismissal of a $1.8 billion lawsuit brought by FTX against him and Binance. The lawsuit, initiated in November 2024 by former FTX founder Sam Bankman-Fried, seeks to recoup funds from a 2021 share buyback deal. FTX claims the transaction was funded using misappropriated customer assets, but Zhao argues the case lacks jurisdiction and factual merit[1].

Zhao's legal team emphasized that he resides in the United Arab Emirates and that all entities involved in the disputed transactions—Binance, FTX, and Alameda Research—were based outside the U.S. The motion asserts that the Delaware court has no authority to adjudicate a case involving offshore entities and cross-border cryptocurrency transactions. Additionally, Zhao’s lawyers argue that he was not a direct recipient of the funds in question and was merely a “nominal counterparty” in the exchange of Binance USD (BUSD) and FTX Token (FTT)[2].

The 2021 share buyback was part of a brief partnership between FTX and Binance. At that time, Binance held a 20% stake in FTX, which was later returned in exchange for cryptocurrencies. Zhao’s lawyers noted that the separation between the two exchanges was driven by strategic disagreements, and there is no evidence linking Zhao directly to the actions that led to FTX’s collapse in 2022[3].

FTX alleges that Binance’s decision to offload its FTT holdings triggered a liquidity crisis, contributing to the exchange’s collapse. In November 2022, Zhao publicly announced Binance’s plan to liquidate its FTT position due to concerns over FTX’s financial health. FTX claims this was a calculated move to accelerate its downfall. However, Zhao’s legal team contends that FTX was already a fraudulent enterprise and that any public statements he made did not cause its collapse[4].

The motion further argues that holding Zhao legally responsible for FTX’s failure is akin to holding a whistleblower liable for the Ponzi scheme she exposed. This legal strategy aligns with Binance’s broader defense, which maintains that FTX’s collapse was the result of a massive corporate fraud, not Binance’s actions[5].

If the court grants Zhao’s motion, it could significantly alter the legal landscape of the case by removing one of the central defendants. This would likely shift the focus to other individuals and entities involved in the buyback deal. FTX’s legal strategy appears aimed at assigning liability and recovering assets, while Zhao’s response highlights jurisdictional and factual limitations[6].

Sources:

[1] Cointelegraph, [https://cointelegraph.com/news/binance-zhao-dismissal-ftx-clawback-lawsuit](https://cointelegraph.com/news/binance-zhao-dismissal-ftx-clawback-lawsuit)

[2] 99Bitcoins, [https://99bitcoins.com/news/altcoins/cz-seeks-dismissal-of-nonsensical-1-76b-ftx-clawback-lawsuit/](https://99bitcoins.com/news/altcoins/cz-seeks-dismissal-of-nonsensical-1-76b-ftx-clawback-lawsuit/)

[3] Blockonomi, [https://blockonomi.com/changpeng-zhao-seeks-dismissal-of-ftxs-1-8-billion-lawsuit-over-share-buyback/](https://blockonomi.com/changpeng-zhao-seeks-dismissal-of-ftxs-1-8-billion-lawsuit-over-share-buyback/)

[4] CoinLaw, [https://coinlaw.io/cz-dismiss-ftx-1-76b-lawsuit/](https://coinlaw.io/cz-dismiss-ftx-1-76b-lawsuit/)

[5] Phemex, [https://phemex.com/news/article/binance-cofounder-cz-seeks-dismissal-from-18b-ftx-lawsuit_14458](https://phemex.com/news/article/binance-cofounder-cz-seeks-dismissal-from-18b-ftx-lawsuit_14458)

[6] advfn.com, [https://mx.advfn.com/bolsa-de-valores/COIN/BTCUSD/crypto-news/96571342/binance-founder-changpeng-zhao-seeks-dismissal-of](https://mx.advfn.com/bolsa-de-valores/COIN/BTCUSD/crypto-news/96571342/binance-founder-changpeng-zhao-seeks-dismissal-of)