Binance’s CZ Hits Back at $1.76B FTX Lawsuit, Argues Deal Was Offshore and US Laws Don’t Apply

FTX’s Lawsuit Against Binance’s CZ Faces Jurisdictional Battle

Changpeng “CZ” Zhao, co-founder and former CEO of Binance, is pushing back hard against FTX’s attempt to reclaim $1.76 billion through a lawsuit filed in Delaware bankruptcy court.

CZ’s legal team argues that the court lacks jurisdiction, pointing out that CZ lives in the United Arab Emirates and has no ties to Delaware or the United States that would justify the case being heard there.

Why Is FTX Targeting CZ and Binance?

The lawsuit stems from a 2021 share repurchase agreement between FTX and Binance.

FTX’s bankruptcy estate alleges that the $1.76 billion transferred to Binance was improperly funded by Alameda Research and constitutes a fraudulent transfer.

Alongside the financial claims, FTX accuses CZ of contributing to its collapse by publicly criticising the exchange’s assets through social media and media statements.

Source: Court Listener

CZ denies wrongdoing, describing himself as merely a “nominal counterparty” in the disputed transaction.

His lawyers maintain that the key transactions involved entities outside the US, specifically Alameda in the British Virgin Islands and Binance’s corporate bodies in Ireland and the Cayman Islands, making US bankruptcy law inapplicable.

The Complex Web of Offshore Deals

At the heart of CZ’s defence is the offshore nature of the dealings.

The funds moved through multiple jurisdictions, none of which fall under US law.

This, his legal team claims, removes Delaware courts from having any authority over the matter.

The filing states,

“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.”

Moreover, CZ’s lawyers argue the service of the lawsuit itself was improperly executed.

They contend that FTX’s attempt to serve him through US-based counsel does not meet legal standards for serving a foreign resident, which they say should invalidate the case outright.

Binance and FTX: A Brief and Tumultuous Partnership

Although Binance once held roughly a 20% stake in FTX, the companies parted ways well before FTX’s collapse.

CZ insists that the decision to divest Binance’s FTT holdings was made public and happened over a year prior to FTX’s downfall.

The legal documents describe the partnership as short-lived and strained, with the blame for FTX’s demise squarely placed on Bankman-Fried and his team.

Two former Binance executives named in the suit, Samuel Wenjun Lim and Dinghua Xiao, have also sought dismissal, echoing CZ’s position that the case lacks merit.

Broader Fallout and Legal Entanglements

FTX’s bankruptcy estate is aggressively pursuing multiple parties to recover lost funds, including prominent figures and companies across the crypto sector.

The legal action against Binance and CZ is part of a wider effort targeting others such as Anthony Scaramucci, Crypto.com, Bybit, KuCoin, and even political groups connected to Mark Zuckerberg.

Meanwhile, the reputations of those involved are heavily tarnished.

CZ has served a prison sentence for US anti-money laundering violations, and Sam Bankman-Fried is currently serving 25 years for fraud and conspiracy charges.

These criminal backgrounds add a complex layer to the ongoing litigation.

What This Binance-FTX Legal Battle Reveals About Crypto’s Challenges

The saga between Binance and FTX exposes not just personal conflicts but deep structural vulnerabilities in how global crypto operations intersect with national legal systems.

Coinlive sees this battle as a reflection of the growing pains in crypto’s push for legitimacy amid fractured jurisdictional oversight.

Binance’s offshore structure might shield it legally for now, but the dispute highlights how cross-border deals can complicate accountability.

This case also raises questions about the survival and credibility of projects entangled in regulatory grey zones.

As authorities worldwide tighten scrutiny, firms operating across multiple jurisdictions without clear governance risk becoming embroiled in prolonged legal battles that can sap resources and shake investor confidence.

The Binance-FTX conflict shows that clearer legal rules and more transparent business practices are needed if crypto is to move forward.