Changpeng “CZ” Zhao, co-founder of Binance, just fired back at the FTX bankruptcy estate in a Delaware court, saying the U.S. has no legal right to come after him over a $1.76 billion clawback claim. On Monday, he filed a motion asking the court to dismiss the case completely. The reason? “The claims are so far removed from Delaware, and even the United States, that the statutes at issue, which lack extraterritorial application, do not even apply,” CZ wrote in the filing. He lives in the United Arab Emirates, not the U.S., and his lawyers argue that being a foreign citizen makes him untouchable by U.S. bankruptcy courts. “The trust and FTX Digital Markets Ltd. can’t allege facts that Zhao was ‘at home’ under Delaware’s jurisdiction,” the motion said. This lawsuit is part of FTX’s efforts to pull back cash it says was improperly moved by Sam Bankman-Fried before the collapse. CZ says none of it makes sense. Binance deal, foreign ties, and the jurisdiction wall This case traces back to a July 2021 share buyback deal between FTX and Binance. In November 2024, the FTX trust sued Binance, CZ, and several others over that deal, accusing them of benefiting from transfers that should’ve never happened. According to the trust, Binance and its execs got funds from selling about 20% of FTX’s global unit and 18.4% of its U.S. arm. The money for that transaction came from Alameda Ltd, which is based in the British Virgin Islands. CZ doesn’t deny the deal happened. What he’s arguing is that the whole thing was offshore — and that matters. Binance’s legal entities are incorporated in Ireland, the Cayman Islands, and BVI, so the money moved in and out of jurisdictions where U.S. laws don’t reach. His motion states that this entire thing is “extraterritorial”, which means Delaware law doesn’t apply. “The trust and FTX Digital Markets nonsensically blame Zhao and Binance for Bankman-Fried’s pervasive malfeasance,” the filing said. And CZ added that he was only a “nominal counterparty” in the transaction — meaning he wasn’t even the main party behind the deal. Two former Binance executives named in the same suit, Samuel Wenjun Lim and Dinghua Xiao, also asked the court in July to cut them from the lawsuit. They too are calling it a stretch. The filing also points out that Binance and FTX were only “briefly business partners.” According to CZ, Binance once held a 20% stake in FTX, but things ended quickly after some “personal grievances.” That equity was swapped for crypto, and they walked away. On top of that, CZ’s lawyers say the entire lawsuit is flawed because serving U.S. counsel on a foreign defendant is not valid under bankruptcy law. The motion says that automatically kills the complaint. It also points out that U.S. bankruptcy laws don’t definitively cover foreign transfers, especially when the transaction is related to securities contracts that fall under safe harbor protections. “The constructive fraud claims also don’t meet legal requirements under safe harbor provisions,” the motion added . Under federal law, safe harbor allows “qualifying transactions” involving securities to be shielded from clawbacks. Now both sides are coming into court with major criminal baggage. CZ already served four months in prison for violating U.S. anti-money-laundering laws. Meanwhile, Sam Bankman-Fried is doing 25 years for fraud, conspiracy, and five other charges. That context makes this fight even messier. Get seen where it counts. Advertise in Cryptopolitan Research and reach crypto’s sharpest investors and builders.
