Binance Founder Changpeng Zhao Files Motion to Dismiss $1.8B FTX Lawsuit

The founder and former CEO of crypto exchange Binance, Changpeng Zhao, has filed a motion to dismiss a $1.76 billion lawsuit brought against him, Binance and other Binance executives by the FTX bankruptcy estate. Zhao’s lawyers argue that U.S. courts have no jurisdiction over him in the case and that he was improperly served.

The motion, submitted Monday to the Delaware Bankruptcy Court, contends that the legal complaint fails on multiple technical fronts. Zhao, who lists his residence as the United Arab Emirates, claims the lawsuit violated procedural norms when serving him as a non-U.S. national. The filing also asserts that Delaware courts have no personal jurisdiction over him because he has no meaningful ties to the state.

“Mr. Zhao is not amenable to suit in this forum, and the statutes Plaintiffs seek to enforce do not reach the extraterritorial transactions described in the Complaint,” the filing stated.

“The claims are in any event legally unfounded, and many are outright incoherent. Mr. Zhao joins the motions to dismiss filed by the other Defendants,” it added, referring to two similar dismissal attempts filed by other Binance executives in July.

The FTX lawsuit

Zhao is attempting to fend off a lawsuit originally filed in November 2024 by FTX Digital Markets Ltd. and the FTX Trading estate. The suit seeks to claw back $1.76 billion worth of crypto assets that were transferred to Binance in July 2021 as part of an equity repurchase deal.

That deal involved FTX buying back a 20% stake Binance held in the exchange. The relationship between the two began in 2019, back when Binance was one of FTX’s earliest backers, but later turned sour.

According to the suit, Sam Bankman-Fried orchestrated the buyback using a mix of FTX-issued FTT tokens and Binance-branded assets like BUSD, later identified as funds that were allegedly misappropriated from customer deposits.

The FTX estate, now managed by a restructuring team, argued the transfer was fraudulent and is seeking to recover the assets to help repay the creditors burned by FTX’s 2022 implosion.

In the filing, Zhao’s legal team also argues that he never directly received the funds in question.

“Plaintiffs in fact show that Mr. Zhao was not a transferee,” the motion stated. “They allege he was merely a nominal counterparty in the transfer of BUSD from Alameda LTD to Binance.”

The document insisted Zhao was just a “nominal signatory” and not the actual recipient of the assets.

FTX and Binance

The lawsuit goes beyond the repurchase itself, accusing Zhao of playing a broader role in destabilizing FTX. In particular, it points to a November 2022 tweet from Zhao that triggered a cascade of customer withdrawals from FTX and a run that contributed to the exchange’s collapse.

Caroline Ellison, former CEO of FTX-affiliated Alameda Research, testified during the Bankman-Fried trial that Alameda had to borrow over $1 billion in customer funds to pay for the Binance buyback. Prosecutors argued FTX and Alameda were likely insolvent even before the repurchase occurred.

Bankman-Fried was sentenced to 25 years in prison in March 2024 for fraud, conspiracy and money laundering.

Zhao himself also served a four-month sentence in the U.S. last year after pleading guilty to violating anti-money laundering rules as part of a broader $4.3 billion settlement between Binance and U.S. regulators. He stepped down as Binance CEO as part of that deal.