Changpeng “CZ” Zhao, former CEO of Binance, asked a Delaware bankruptcy court to dismiss FTX’s lawsuit against him. He claimed, among other reasons, that it has no jurisdiction, as CZ is not a US or Delaware resident.
FTX is attempting to recover $1.76 billion from Binance, which was transferred between the two firms under ambiguous circumstances.
Why is FTX Trying to Sue CZ?
The FTX collapse left a ton of fallout all over the crypto industry, and the saga periodically resurfaces in bizarre ways. Today, it’s appearing once again.
According to a recent report, CZ just filed to ask if a Delaware bankruptcy court could dismiss FTX’s lawsuit, which is attempting to recoup $1.76 billion that Sam Bankman-Fried sent to Binance:
“The claims are so far removed from Delaware, and even the United States, that the statutes at issue, which lack extraterritorial application, do not even apply,” CZ claimed. Specifically, this argument insists that CZ’s residence in the UAE makes Delaware an improper venue to litigate this suit.
CZ further claimed that foreign transfers aren’t covered by US bankruptcy law. He described himself as a “nominal counterparty” in the alleged transaction, which took place over three distinct jurisdictions other than the United States.
A Look at the Facts
Changpeng “CZ” Zhao, former CEO of Binance, has had a troubled history with FTX over the years. In 2023, FTX sued him on the grounds that his social media posts damaged the firm’s reputation.
In 2022, Binance was called as a witness against FTX in a British court. At the time, CZ was still in charge.
Indeed, Sam Bankman-Fried has persistently blamed CZ for the liquidity crisis that shuttered FTX.
Last year, the firm filed this clawback lawsuit, alleging that Bankman-Fried improperly transferred $1.76 billion to Binance. Since then, the suit hasn’t made a ton of progress.
CZ’s filing claims that FTX was “briefly business partners” with Binance, and that FTX “nonsensically blames” Binance and its employees for its own malfeasance.
It’s unclear how well this argument will work, but two other former Binance executives also asked the court to be dismissed from this suit. For now, it looks like a waiting game.
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