Changpeng Zhao, the founder and former CEO of Binance, has requested the dismissal of a $1.76 billion lawsuit filed by the bankrupt asset management company FTX. Filed on Monday, Zhao's appeal argues that as a resident of the United Arab Emirates, he is not subject to the personal jurisdiction of the Delaware court. The lawsuit, initiated in November 2024, stems from a share buyback agreement from July 2021. Zhao's defense attorney contends that the allegations exceed the scope established by U.S. bankruptcy law.
FTX's $1.76 Billion Bankruptcy Allegation
FTX's bankruptcy assets allege that Zhao and Binance unlawfully appropriated approximately $1.76 billion in cryptocurrency in share buyback transactions from former CEO Sam Bankman-Fried. The allegations specify that Binance purchased cryptocurrency under a payment package to buy back 20% of global operations and 18.4% of the subsidiary's shares in the U.S.
FTX's lawyers classify these transactions as "fraudulent transfers" and assert that Zhao and other executives are obligated to repay this amount. Documents show that the FTX coins held by Binance and the cryptocurrencies traded must be registered securities. The court is expected to decide whether the claims can be extended beyond the scope of U.S. bankruptcy law.
Challenge Regarding Zhao's Jurisdiction
In Zhao's legal filing, he emphasizes his residency in the United Arab Emirates, claiming that the Delaware court has no jurisdiction over him. The lawsuit argues that the plaintiffs have sought to improperly extend bankruptcy law to foreign operations, stating: "Fraudulent transfer claims require extending bankruptcy law beyond U.S. borders unjustly."
Additionally, the transactions mentioned are cross-border in nature, and U.S. law related does not have extraterritorial applicability. In a jurisdiction-related lawsuit, Samuel Wenjun Lim and Dinghua Xiao argued in July that these claims are unconstitutional.
