Changpeng Zhao Seeks Dismissal of Billion-Dollar FTX Lawsuit
By: Eva Baxter
In a dramatic turn in the ongoing legal battles in the cryptocurrency world, Binance founder Changpeng Zhao has filed a motion seeking the dismissal of an extensive lawsuit brought against him by the defunct exchange FTX. The lawsuit, which seeks to recover $1.8 billion, centers around a contentious share buyback deal between Binance and FTX. The now-bankrupt exchange alleges that this transaction was funded through assets that were fraudulently transferred, a claim that Zhao vehemently disputes.
The primary argument that Zhao presents is directed at the jurisdictional scope of the charges. According to Zhao, a resident of the United Arab Emirates, the allegations are "so far removed" from US jurisdiction that the statutes invoked in the lawsuit should not apply to him. He argues that the case aims to "nonsensically blame" him for the fraudulent activities of FTX's founder, Sam Bankman-Fried, who has already been penalized with a 25-year sentence following a major fraud trial.
Zhao's legal team is emphasizing the lack of authority a Delaware court holds over international transactions of this nature, especially given Zhao's non-residential status in the United States. The filing underscores that the regulatory frameworks in place lack the extraterritorial reach needed to substantiate the claims made by FTX against him. This legal battle comes at a crucial time as Binance navigates its own complex regulatory landscape across various jurisdictions.
The outcome of this case could have significant implications for jurisdictional challenges in cryptocurrency litigation. Zhao’s motion highlights a fundamental issue in crypto regulations globally — the challenge of enforcement across borders in an industry that is inherently decentralized and borderless. As the legal proceedings unfold, it remains to be seen how the courts will respond to these jurisdictional arguments and whether Zhao's motion will be successful in quashing the legal action initiated by FTX.
