CZ Strongly Objects to FTX's $1.76 Billion Lawsuit: "US Court Has No Jurisdiction!"
One of the cryptocurrency world's most striking legal battles has taken a new turn. Binance founder and former CEO Changpeng Zhao (#CZBฤฐNANCE ) has formally filed a lawsuit with the court seeking to dismiss the $1.76 billion lawsuit filed by #FTX 's bankruptcy administration.
๐ผ Why Was the Lawsuit Filed?
FTX, which suffered a major collapse in 2022, continues to seek compensation from various companies and individuals during its bankruptcy process, citing "ill-gotten gains" and "improper transactions." In this context, FTX's current administration has scrutinized certain transactions involving Binance during the Sam Bankman-Fried era.
According to the lawsuit, FTX's bankruptcy administration alleges that the cryptocurrencies Binance received in exchange for its approximately 20% stake in FTX Global were obtained improperly. It is alleged that Binance acquired a significant amount of FTT tokens and other assets during the transfer of these shares, but that this process is legally problematic.
๐ What Are CZ's Objections?
Changpeng Zhao's objection, filed on Monday with the bankruptcy court in the US state of Delaware, included the following main arguments:
US Court Lacks Jurisdiction: CZ argued that he resides in the United Arab Emirates (UAE) and therefore the Delaware court has no jurisdiction over him.
Cross-Border Transactions: He argued that most of the transactions in question occurred internationally and cross-border, and therefore, US bankruptcy laws cannot cover these transactions.
Cryptocurrency Purchase in Exchange for Shares is Legitimate: He argued that Binance returned its FTX shares and that the assets he received in exchange constituted a legal exchange transaction.
Sam Bankman-Fried's Crimes Cannot Be Imposed on Him: Zhao stated that SBF was responsible for FTX's collapse and that he cannot be held responsible for this failure.
๐ History Between Binance and FTX
As you may recall, the relationship between CZ and Sam Bankman-Fried (SBF) initially began as a "partnership." Binance joined FTX as an early investor but later decided to sell back its shares. Following this sale, their relationship soured, and mutual accusations arose, particularly during FTX's bankruptcy in 2022.
FTX's bankruptcy administration characterized some aspects of this process as "corruption" and "bad faith," while CZ considers these accusations baseless and "politically motivated."
โ๏ธ What Will the Case Do?
All eyes are now on how the US Delaware Court will respond to CZ's jurisdictional challenge. If the court deems CZ outside of jurisdiction due to his residence, the case could be dismissed outright. However, if the court maintains jurisdiction and decides to proceed with the case, CZ is likely to face a longer legal battle.
๐งฉ Latest: Two CEOs, Two Different Fate
CZ was sentenced to four months in prison for violating anti-money laundering regulations in the US and recently completed his sentence.
SBF (Sam Bankman-Fried) is currently serving a 25-year sentence for fraud.
