Former Binance CEO Changpeng Zhao (CZ) has petitioned a Delaware bankruptcy court to dismiss FTX’s $1.8 billion lawsuit seeking restitution for a 2021 share repurchase agreement, which FTX claims involved fraudulent transfers by Binance.
In his motion, Zhao argues that FTX’s accusations—aimed at holding him “responsible for the misconduct of Mr. Bankman-Fried”—represent “nonsensical blame” for the founder’s actions. He further contends that the case’s reliance on foreign law is misplaced, stating the claims lack extraterritorial application and thus irrelevant.
Zhao, a current UAE resident, highlights the jurisdictional disconnect, pointing out the Binance deal’s execution involved entities registered in Ireland, the Cayman Islands, and the British Virgin Islands (BVI), while the counterparty (Alameda) was also based in the BVI.
Zhao’s Arguments
Zhao’s legal team argues the lawsuit’s underlying claims are “factually incorrect,” noting non-allegations linking Zhao to the transfer of funds or control over the involved cryptocurrencies (Binance USD and FTX Token). They characterize Zhao’s role as a “nominal counterparty,” not a participant or transferee.
Adding another layer, Zhao maintains his public social media posts (previously challenged by FTX) concerning Binance’s FTT holdings and the subsequent FTX collapse, did not precipitate the company’s downfall. The filing counters the implication of timing manipulation, stating FTX was “systematically fraudulent,” rendering its collapse unavoidable even without the posts.
Changpeng Zhao testifies on his role during FTX’s downfall.
Case Background
FTX filed its complaint in November 2023, alleging that Binance, then run by Zhao, accepted fraudulent transfers to finance the buyback of shares it had previously acquired. FTX asserts Binance and Bankman-Fried were aware of FTX’s financial straits but siphoned funds anyway.
Binance, alongside Zhao and other former executives (Lim Samuel Wenjun and Xiao Dinghua), also requested the suit’s dismissal in May, counter-claiming FTX’s collapse stemmed from its “massive corporate fraud,” not the purported Binance transfers. Claims highlight Zhao served a four-month sentence in 2023 for money laundering, while Bankman-Fried received a 25-year prison sentence in March 2024, currently on appeal.
