Changpeng “CZ” Zhao, the former CEO of Binance, has requested the Delaware bankruptcy court to dismiss FTX's lawsuit against him. He argues, among other reasons, that the court lacks jurisdiction because CZ is not a resident of the United States or Delaware. FTX is attempting to recover $1.76 billion from Binance, the amount that was transferred between the two companies in unclear circumstances.

Why is FTX Trying to Sue CZ?

The collapse of FTX has left countless consequences for the entire cryptocurrency industry, and this story occasionally reappears in strange ways. Today, it has surfaced once again.

According to a recent report, CZ has just filed for bankruptcy to inquire whether the Delaware bankruptcy court could dismiss FTX's lawsuit, which is trying to recover the $1.76 billion that Sam Bankman-Fried sent to Binance:

"These claims are so disconnected from Delaware, and even the United States, that the disputed laws, which are not enforceable extraterritorially, are not even applicable," CZ stated. Specifically, this argument asserts that CZ's residency in the UAE makes Delaware an unsuitable venue for this lawsuit.

CZ continues to assert that the overseas money transfer is outside the scope of U.S. bankruptcy law. He describes himself as a "nominal partner" in the alleged transaction, which took place in three separate jurisdictions outside the U.S.

Looking at the Truth

Changpeng “CZ” Zhao, the former CEO of Binance, has had an unstable relationship with FTX over the years. In 2023, FTX sued him on the grounds that his social media posts damaged the company’s reputation.

In 2022, Binance was summoned as a witness against FTX in a UK court. At that time, CZ was still in charge.

Indeed, Sam Bankman-Fried has continuously blamed CZ for the liquidity crisis that led to FTX's closure.

Last year, the company filed this lawsuit for damages, alleging that Bankman-Fried illegally transferred $1.76 billion to Binance. Since then, the lawsuit has not made much progress.

CZ's filings claim that FTX "was a short-term business partner" with Binance and that FTX "unreasonably blames" Binance and Binance employees for its own misconduct.

It is unclear how effective this argument will be, but two other former executives of Binance have also requested the court to dismiss this lawsuit. Currently, it seems that we have to wait.