Changpeng Zhao, the founder of Binance, filed a lawsuit in Delaware court, requesting the dismissal of the claims from the FTX liquidation fund that seeks to recover $1.76 billion. This legal battle comes amid a financial dispute related to a deal made in 2021, when FTX purchased shares of Binance, a transaction that FTX later considered involved in the illegal use of customer funds.
Zhao's legal team relied on several key points in his defense, most notably the lack of jurisdiction of the Delaware court, given that Zhao resides outside the United States, specifically in the UAE. The defense also pointed out a flaw in the notification procedures, as legal protocols for notifying international parties were not observed.
Binance insists that Zhao did not have direct control over the funds, but was merely a nominal party in the deal. Meanwhile, the FTX liquidation management claims that the amount of the deal was funded with seized customer funds, and that FTX was indeed in a state of financial insolvency at that time.
The legal filing also includes media-related accusations; FTX believes that tweets posted by Zhao in November 2022 about plans to sell FTT tokens contributed to undermining market confidence and accelerated the company's collapse.
In contrast, Zhao's lawyers described FTX as a 'fraudulent scheme,' asserting that the cause of its collapse stemmed from internal failures and not from external actions or rumors.
It is worth noting that this is not the first legal move by Binance to halt the lawsuit; a similar request was filed in May 2024.
Today, the case goes beyond mere financial disagreement, opening the door to complex legal questions regarding jurisdiction in cross-border disputes and regulating the relationship between digital assets and global judicial systems.
While Sam Bankman-Fried, the founder of FTX, is serving a 25-year prison sentence for fraud charges, Zhao completed a reduced sentence of only four months for violations of anti-money laundering laws.
📌 The final outcome of this lawsuit could shape new contours for how international courts handle digital asset cases and disputes between cross-border entities.
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