Changpeng Zhao (CZ), co-founder and former CEO of Binance, has formally filed a motion in a United States bankruptcy court seeking dismissal of the suit brought about by the FTX bankruptcy estate.
The lawsuit alleges to recover $1.76 billion wrongfully transferred between Binance and FTX.
On Monday, CZ, in a filing, purportedly sought to have the claims against him dismissed on the grounds of lack of jurisdiction.
CZ noted that he now resides in the United Arab Emirates (UAE), which is beyond the legal jurisdiction of the Delaware court where the case is being heard.
His lawyers also raised the international nature of the transactions implicated in the suit, contending that the U.S. bankruptcy statutes cited in the suit do not have global jurisdiction.
Cross-Border Transactions and Jurisdiction Are at the Forefront of Legal Complaint
Zhao’s complaint is the addition to the list of jurisdictional complaints filed by former Binance executives Samuel Wenjun Lim and Dinghua Xiao, who filed similar requests for dismissal in July.
At the center of the lawsuit is a July 2021 equity buyback deal between FTX and Binance, where Binance exchanged its equity in FTX for various crypto holdings, including FTT, FTX’s native token.
Lawyers representing FTX contend that the actions of Binance, i.e., dumping their equity when FTX was about to run into financial issues, were behind the collapse of the exchange.
CZ’s defense is that Binance only exchanged its share for digital assets and had no further dealings with FTX after the buyback.
Also Read: FTX Files 23 Fresh Lawsuits Against Binance, SkyBridge, Crypto.com To Recover Funds
FTX Estate Sues Illegal Transfer of Billions in Assets
The suit, filed by the FTX Trust and FTX Digital Markets Ltd., alleges Binance and its leaders illegally received significant amounts, specifically alleging Binance’s sale of approximately 20% of FTX’s global business and 18.4% of US operations.
This sale, the FTX estate asserts, was an improper transfer of nearly $1.76 billion.
The estate argues that Binance’s actions drained essential liquidity from FTX at a time it needed it most, hastening its plummet into bankruptcy.
Legal experts view this case as one of the highest-profile efforts by the FTX estate to recover funds since it aims to restore cash to customers and creditors following the platform’s collapse into bankruptcy.
Also Read: FTX Commences $5 Billion Second Payout to Verified Creditors
Wider Consequences and Ongoing Fallout of FTX Collapse
Zhao’s petition is in line with the broader legal issues that have unfolded following the FTX collapse, which ranks as one of the most significant crypto fraud cases ever.
FTX founder Sam Bankman-Fried is already in prison with hopes to see a reduced sentence for fraud and conspiracy, while CZ just spent four months in jail for violating U.S. anti-money laundering rules.
Zhao contends that the FTX estate is unfairly attempting to hold him and other Binance executives accountable for Bankman-Fried’s wrongdoing, arguing that Binance transactions were lawful and that he cannot be targeted in U.S. court proceedings.
The case is a multi-billion-dollar high-stakes court battle, but could also set precedents for how U.S. courts handle cross-border crypto disputes.