Changpeng Zhao (CZ), co-founder of Binance, is seeking to have a US$1.76 billion lawsuit initiated by the FTX bankruptcy trust dismissed. Zhao’s legal representatives argue that the United States courts lack jurisdiction over him as he resides in the United Arab Emirates. They contend that the financial transactions at the centre of the lawsuit were conducted between offshore entities.
### CZ Asserts Lack of US Jurisdiction
In a motion filed with the US Bankruptcy Court in Delaware, Zhao’s team contends that the allegations are beyond the court’s reach. Highlighting this critical point, they state that the statutes involved do not have extraterritorial jurisdiction. The legal team claims the plaintiffs are unjustly attributing the failures of Sam Bankman-Fried to Zhao and others.
The lawsuit, which was brought forth by the FTX bankruptcy trust in November 2024, accuses Zhao, Binance, and former executives of unlawfully receiving billions in funds linked to Bankman-Fried’s now-defunct business empire.
### Breakup Deal at the Heart of the Lawsuit
A significant element of this legal battle revolves around a July 2021 agreement that allowed Binance to divest its interests in FTX International and FTX US, holding stakes of 20% and 18.4%, respectively. Zhao’s team asserts that the transaction took place exclusively between offshore companies and involved payment in cryptocurrencies, thus avoiding any US regulatory framework. The filing explains that Binance and FTX were initially business partners before severing ties, with Zhao trading equity for digital assets, including FTT tokens.
Zhao recently concluded a four-month prison term for US anti-money laundering violations. In parallel, Bankman-Fried is currently serving a 25-year sentence after being convicted of fraud and conspiracy.
In summary, the motion to dismiss the lawsuit positions Zhao and Binance’s actions as compliant with international dealings while distancing them from the challenges faced by their former partner, opening a complex discussion around jurisdiction and responsibility in the evolving world of cryptocurrency.
