Changpeng Zhao, co-founder of Binance, has requested the Delaware Bankruptcy Court to dismiss the $1.7 billion lawsuit filed by FTX Trust. He stated that the U.S. does not have jurisdiction to prosecute him on the debt recovery allegations.

Changpeng Zhao Responds to FTX Bankruptcy

The cryptocurrency exchange FTX no longer exists, having filed a lawsuit against Binance and its former CEO in November 2024, seeking to recover funds they allege were unlawfully transferred by Sam Bankman-Fried before the company's collapse. However, CZ argues that these allegations are unreasonable.

"The trust fund and FTX Digital Markets unfairly blamed Zhao and Binance for Bankman-Fried's rampant fraud," the filings stated. CZ added that he was merely a "nominal partner" in the transaction, meaning he was not even the principal party behind the deal.

CZ's lawyers also pointed out that U.S. bankruptcy law does not entirely cover the transfer of funds abroad, especially when transactions involve securities contracts that fall under the protection of bankruptcy law.

The additional petition states: "The claims of constructive fraud also do not meet the legal requirements under the safe harbor provisions."

Changpeng's Defense Attorney Claims the Case is "Extraterrestrial"

Zhao's lawyer argues that CZ resides in the United Arab Emirates (UAE) and being a foreign citizen exempts him from being tried in U.S. courts.

CZ stated in the filing: "These claims are so far removed from Delaware, even the U.S., that the laws being contested, which are not effective extraterritorially, are not even applicable."

CZ also argued that the entire transaction was conducted overseas, meaning Binance's entities were established in Ireland, the Cayman Islands, and the British Virgin Islands. Therefore, U.S. law does not apply to these locations, rendering the entire transaction extraterrestrial.

CZ's defense attorney added: "The trust fund and FTX Digital Markets Ltd. cannot provide evidence that Zhao 'is at home' under Delaware's jurisdiction."

The Partnership Between Binance and FTX

Furthermore, the filings also indicate that Binance and FTX were merely "short-term business partners." CZ stated that Binance held a 20% stake in FTX, but everything quickly ended after some "personal grievances."

Two former executives, Samuel Wenjun Lim and Dinghua Xiao, even urged the court to dismiss their lawsuit in July. They claimed it was an exaggeration.