Changpeng Zhao, co-founder of the Binance trading platform, asked the bankruptcy court in Delaware to dismiss a $1.7 billion lawsuit filed by FTX Trust. Zhao confirmed that the United States has no right to sue him for alleged debt collection.
Changpeng Zhao responds to FTX's bankruptcy
The now-defunct cryptocurrency trading platform FTX filed a lawsuit against Binance and its former CEO in November 2024, seeking to recover funds that it claimed Sam Bankman-Fried illegally transferred before the company's collapse. However, CZ denied these allegations and described them as ridiculous.
The filing stated that 'the FTX Digital Markets fund and company wrongfully blamed Zhao and Binance for the widespread fraud perpetrated by Bankman-Fried.' CZ added that he was merely a 'nominal counterparty' in the deal, meaning he wasn't even the main party behind it.
CZ's lawyers also point out that U.S. bankruptcy law does not fully cover the transfer of funds abroad, especially when the transaction involves securities contracts that fall under bankruptcy law protection.
The filing added that 'the allegations of constructive fraud also do not meet the legal requirements under safe harbor provisions.'
Zhao's defense attorney claims that the case is 'out of this world'
Zhao's lawyers stated that Zhao resides in the UAE, and being a foreign national makes him immune from prosecution in U.S. courts.
CZ wrote in the filing: 'These claims are far from Delaware's jurisdiction, and the United States in fact, to the extent that the relevant laws, which have no effect outside the territory, do not even apply.'
CZ also claimed that the entire transaction was conducted outside the country, meaning that Binance's legal entities are registered in Ireland, the Cayman Islands, and the British Virgin Islands. Therefore, U.S. law does not apply to these locations, making the entire transaction outside the jurisdiction.
CZ's defense attorney added: 'The organization and FTX Digital Markets Ltd. failed to provide evidence that Zhao was 'in his home' under Delaware jurisdiction.'
Binance and FTX Partnership
Furthermore, the filing also indicates that Binance and FTX were merely 'short-term business partners.' CZ noted that Binance owned a 20% stake in FTX, but the relationship ended quickly after some 'personal grievances.'
Even two former executives, Samuel Wengong Lim and Dinghua Xiao, urged the court to dismiss their lawsuit in July, describing it as an exaggeration.