Changpeng “CZ” Zhao has filed a motion in U.S. bankruptcy court seeking to dismiss FTX’s $1.76 billion clawback lawsuit, arguing that the court lacks jurisdiction due to the offshore nature of the transactions.

The request, filed on August 4 in Delaware bankruptcy court, challenges a core legal battle between Binance and the FTX bankruptcy estate. At the heart of the dispute is a 2021 share buyback deal in which FTX allegedly sent $1.76 billion via Alameda Research to repurchase equity from Binance.

Offshore Deal at the Core of Jurisdiction Dispute

Zhao’s legal team emphasized that the entire transaction took place through foreign entities, including companies in the British Virgin Islands, Ireland, and the Cayman Islands. They argue this places the deal outside the reach of U.S. bankruptcy statutes.

In the motion, CZ also described himself as merely a “nominal counterparty”, claiming the lawsuit tries to unjustly pin FTX’s internal failures on him.

The defense further argues:

• Zhao is a UAE resident with no substantial ties to Delaware or the U.S.
• U.S. law does not apply to foreign-to-foreign transactions
• Simply serving a U.S.-based legal team is insufficient grounds for jurisdiction

Others Also Seek Dismissal

The lawsuit also names two former Binance executives, Samuel Wenjun Lim and Dinghua Xiao, who reportedly filed to be removed from the suit last month on similar jurisdictional grounds.

FTX Legal Fallout Continues

This is just one of several lawsuits stemming from FTX’s 2022 collapse, which left billions in user funds missing and triggered widespread legal action.

FTX’s bankruptcy estate filed the original suit against Binance and Zhao in 2024, alleging:

• Improper transfer of funds
• Damage to FTX’s reputation
• Breach of fiduciary responsibility

Zhao, once the most influential figure in global crypto, has faced legal troubles of his own:

• Pled guilty to U.S. anti-money laundering violations
• Served a four-month prison sentence
• Resigned from his role as Binance CEO

Meanwhile, Sam Bankman-Fried, founder of FTX, is currently serving a 25-year prison sentence for fraud.

What Happens Next?

The court must now decide whether FTX’s claims fall under U.S. jurisdiction or if CZ’s offshore defense holds up.

A ruling in Zhao’s favor could set a precedent for future cross-border crypto legal battles, especially in the context of offshore entities and decentralized finance.