Changpeng “CZ” Zhao, the founder of Binance, has filed a motion to dismiss a $1.76 billion clawback lawsuit brought by FTX’s bankruptcy estate, arguing that U.S. courts lack jurisdiction over the offshore transaction.
Author: Sahil Thakur
Changpeng “CZ” Zhao, the founder of Binance, has filed a motion to dismiss a $1.76 billion clawback lawsuit brought by FTX’s bankruptcy estate, arguing that U.S. courts lack jurisdiction over the offshore transaction.
The legal filing, submitted on August 4 in the Delaware bankruptcy court, asserts that the share buyback deal in question occurred entirely outside the United States and involved foreign entities. According to Zhao’s legal team, the funds in question were transferred between companies based in the British Virgin Islands, Ireland, and the Cayman Islands, far from U.S. legal reach.
The dispute centers on a July 2021 agreement in which FTX allegedly sent $1.76 billion, through Alameda Research, to buy back equity from Binance. The FTX bankruptcy estate contends that the transaction was improper and is seeking to reclaim the funds under U.S. bankruptcy law.
Zhao’s response, however, is that the transaction took place entirely between foreign legal entities and should not fall under U.S. statutes, which “lack extraterritorial application.” His lawyers argued that he is a resident of the United Arab Emirates with no ties to Delaware or the broader United States, a key point in contesting jurisdiction.
“The trust and FTX Digital Markets Ltd. can’t allege facts that Zhao was ‘at home’ under Delaware’s jurisdiction,” the motion stated.
Crypto Patel
@CryptoPatel
🚨 BREAKING: Binance co-founder CZ wants out of the $1.8B FTX lawsuit. He just told the US court it has no jurisdiction over him because he lives in the UAE and the case is about offshore deals. If this holds, CZ might walk away untouched. https://t.co/wBdQw7YRdb
03:30 AM·Aug 6, 2025
Zhao further claims that the lawsuit lacks merit due to protections under “safe harbor” provisions in U.S. bankruptcy law, which shield certain securities-related transactions from clawbacks. His legal team emphasized that Zhao was a “nominal counterparty” to the deal, not its primary architect or beneficiary.
Binance and FTX were briefly business partners, with Binance once holding a 20% stake in FTX. That equity was later sold back in the 2021 deal now under dispute. Zhao maintains that the relationship ended due to personal disagreements and was fully executed through offshore corporate structures.
Two former Binance executives also named in the lawsuit, Samuel Wenjun Lim and Dinghua Xiao, have filed similar motions requesting removal from the case.
This case is part of FTX’s broader legal effort to claw back billions of dollars allegedly misappropriated before its dramatic collapse in November 2022. It also comes as both Zhao and FTX founder Sam Bankman-Fried deal with personal legal consequences.
Zhao recently completed a four-month sentence after pleading guilty to violating U.S. anti-money laundering laws. Bankman-Fried, meanwhile, is serving a 25-year prison term for fraud and conspiracy.
As both figures continue to navigate high-profile legal battles, this jurisdictional challenge could shape the ability of U.S. bankruptcy courts to enforce clawback provisions in cross-border crypto deals.
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