Changpeng “CZ” Zhao has filed a motion to dismiss FTX’s $1.76 billion clawback lawsuit, arguing that the U.S. bankruptcy court lacks jurisdiction over him as a foreign resident involved in offshore transactions.
The motion, submitted on August 4 in Delaware bankruptcy court, follows a report by Bloomberg Law. The case revolves around a July 2021 share repurchase agreement in which FTX, through its sister company Alameda Research, allegedly transferred $1.76 billion to Binance to buy back equity.
FTX’s bankruptcy estate contends the transaction was improper and is attempting to reclaim the funds under U.S. bankruptcy law. However, Zhao maintains that the deal involved only foreign entities—including firms based in the British Virgin Islands, Ireland, and the Cayman Islands—placing it beyond the jurisdiction of U.S. courts.
Challenge to Jurisdiction and Legal Defense
Zhao’s legal team argued that he resides in the United Arab Emirates and has no substantial connections to Delaware or the broader United States. The motion asserts that U.S. bankruptcy laws do not apply to the disputed transfers, which were conducted entirely outside the country, and that serving legal counsel within the U.S. does not constitute valid service on a foreign individual.
Zhao characterized himself as a “nominal counterparty” in the transaction, claiming the lawsuit seeks to unjustly hold him accountable for FTX’s internal mismanagement. Two former Binance executives also named in the case, Samuel Wenjun Lim and Dinghua Xiao, filed motions last month requesting their removal from the lawsuit.
FTX collapse legal battles
This lawsuit is among several legal disputes stemming from FTX’s collapse in 2022. In 2024, FTX’s bankruptcy estate filed suit against Binance and Zhao, aiming to recover funds and claiming reputational damage as a result of the alleged transaction.
Zhao has faced his own legal challenges, including a guilty plea to U.S. anti-money laundering violations, for which he served a four-month sentence. Meanwhile, FTX founder Sam Bankman-Fried is currently serving a 25-year prison term for fraud.
