Zhao Seeks Dismissal of FTX 1.8B Lawsuit Over Jurisdiction and Fraud Claims

Changpeng Zhao, former CEO of Binance, has formally requested a Delaware bankruptcy court to dismiss a $1.8 billion lawsuit brought by FTX against him and other former executives. The lawsuit, filed in November, alleges that Binance received funds from FTX in 2021 as part of a fraudulent share repurchase deal that used customer assets. Zhao, who now resides in the United Arab Emirates, argues that the legal claims lack jurisdiction because the transactions occurred outside the U.S. and involved entities registered in the Cayman Islands, Ireland, and the British Virgin Islands [1].

The suit, led by FTX’s liquidators, claims that the exchange and its founder, Sam Bankman-Fried—who was recently sentenced to 25 years in prison—used customer funds to facilitate the repurchase. Zhao’s legal team disputes this, stating that he was not a direct recipient of the transferred crypto and played only a “nominal counterparty” role in the deal [1]. The motion also highlights that the deal involved Binance USD (BUSD) and FTX Token (FTT), both of which are stablecoins created by the respective exchanges [1].

Zhao also addressed concerns that his public statements on X—particularly about Binance selling FTT—may have accelerated FTX’s collapse. He maintains that these posts did not contribute to the crisis, and that FTX was already inherently fraudulent. His lawyers compare holding him liable for the exchange’s collapse to holding a whistleblower accountable for exposing a Ponzi scheme [1].

Binance itself has also sought to dismiss the lawsuit, arguing it is “legally deficient” and that FTX’s collapse was due to its own fraudulent activities. Other defendants, including former compliance officer Samuel Wenjun Lim and executive Dinghua Xiao, have also filed motions to dismiss the case [1].

Zhao, who spent four months in prison in 2023 after pleading guilty to money laundering, remains a central figure in ongoing legal battles across the crypto sector. The outcome of this motion could have significant implications for the liability of corporate actors in cross-border digital asset transactions.

Source: [1] Binance founder Changpeng Zhao seeks dismissal from $1.8B FTX lawsuit (https://cointelegraph.com/news/binance-zhao-dismissal-ftx-clawback-lawsuit?utm_source=rss_feed&utm_medium=rss&utm_campaign=rss_partner_inbound)