Binance Founder Changpeng Zhao Files Motion to Dismiss $1.8B FTX Lawsuit

The founder and former CEO of crypto alternate Binance, Changpeng Zhao, has filed a movement to dismiss a $1.76 billion lawsuit introduced in opposition to him, Binance and different Binance executives by the FTX chapter property. Zhao’s legal professionals argue that U.S. courts haven’t any jurisdiction over him within the case and that he was improperly served.

The motion, submitted Monday to the Delaware Chapter Courtroom, contends that the authorized criticism fails on a number of technical fronts. Zhao, who lists his residence because the United Arab Emirates, claims the lawsuit violated procedural norms when serving him as a non-U.S. nationwide. The submitting additionally asserts that Delaware courts haven’t any private jurisdiction over him as a result of he has no significant ties to the state.

“Mr. Zhao isn’t amenable to go well with on this discussion board, and the statutes Plaintiffs search to implement don’t attain the extraterritorial transactions described within the Criticism,” the submitting acknowledged.

“The claims are in any occasion legally unfounded, and plenty of are outright incoherent. Mr. Zhao joins the motions to dismiss filed by the opposite Defendants,” it added, referring to 2 related dismissal makes an attempt filed by different Binance executives in July.

The FTX lawsuit

Zhao is making an attempt to fend off a lawsuit originally filed in November 2024 by FTX Digital Markets Ltd. and the FTX Buying and selling property. The go well with seeks to claw again $1.76 billion price of crypto property that had been transferred to Binance in July 2021 as a part of an fairness repurchase deal.

That deal concerned FTX shopping for again a 20% stake Binance held within the alternate. The connection between the 2 started in 2019, again when Binance was one in every of FTX’s earliest backers, however later turned bitter.

In line with the go well with, Sam Bankman-Fried orchestrated the buyback utilizing a mixture of FTX-issued FTT tokens and Binance-branded property like BUSD, later recognized as funds that had been allegedly misappropriated from buyer deposits.

The FTX property, now managed by a restructuring group, argued the switch was fraudulent and is searching for to recuperate the property to assist repay the collectors burned by FTX’s 2022 implosion.

Within the submitting, Zhao’s authorized group additionally argues that he by no means immediately obtained the funds in query.

“Plaintiffs actually present that Mr. Zhao was not a transferee,” the movement acknowledged. “They allege he was merely a nominal counterparty within the switch of BUSD from Alameda LTD to Binance.”

The doc insisted Zhao was only a “nominal signatory” and never the precise recipient of the property.

FTX and Binance

The lawsuit goes past the repurchase itself, accusing Zhao of taking part in a broader position in destabilizing FTX. Particularly, it factors to a November 2022 tweet from Zhao that triggered a cascade of buyer withdrawals from FTX and a run that contributed to the alternate’s collapse.

Caroline Ellison, former CEO of FTX-affiliated Alameda Analysis, testified through the Bankman-Fried trial that Alameda needed to borrow over $1 billion in customer funds to pay for the Binance buyback. Prosecutors argued FTX and Alameda had been possible bancrupt even earlier than the repurchase occurred.

Bankman-Fried was sentenced to 25 years in jail in March 2024 for fraud, conspiracy and cash laundering.

Zhao himself additionally served a four-month sentence within the U.S. final yr after pleading responsible to violating anti-money laundering guidelines as a part of a broader $4.3 billion settlement between Binance and U.S. regulators. He stepped down as Binance CEO as a part of that deal.