Former Binance CEO Changpeng Zhao is pushing back against a $1.8 billion lawsuit filed by bankrupt crypto exchange FTX, asking a Delaware bankruptcy court to dismiss the claims entirely. The case revolves around a 2021 share repurchase deal that FTX alleges was funded with misappropriated customer funds.
Zhao Denies Role in Alleged Fraudulent Transfer
FTX, now under the management of a bankruptcy legal team, claims it transferred $1.8 billion in crypto to Binance as part of a buyback agreement. It alleges this transaction was conducted with customer assets FTX was not authorized to use.
However, Zhao has countered that he had no control over the transferred assets, arguing that he was “merely a nominal counterparty” and not a recipient of the funds. His legal team also emphasized that “every pertinent part” of the deal took place outside U.S. jurisdiction, involving entities in the Cayman Islands, British Virgin Islands, and Ireland.
Lawsuit Lacks U.S. Jurisdiction, Zhao Argues
Zhao, a resident of the United Arab Emirates, further contends that U.S. statutes cited in the lawsuit do not apply to foreign activities. The deal, which used Binance USD (BUSD) and FTX’s native token FTT, never involved Zhao personally holding or transferring the crypto.
Zhao Refutes Claims His X Posts Collapsed FTX
FTX also claims Zhao’s public posts on social media triggered a run on the exchange, accelerating its collapse. Zhao responded that his posts only revealed existing issues and did not cause the failure of what he described as a “fraudulent enterprise”.
His lawyers stated: “Even if Mr. Zhao’s posts contributed to FTX’s collapse, the firm had no right to persist in fraud indefinitely.”
Binance and Executives Also Seek Dismissal
Binance, along with former executives Samuel Wenjun Lim and Dinghua Xiao, has also requested dismissal, stating the case is legally weak. Zhao previously served a four-month prison term for money laundering, while FTX’s founder, Sam Bankman-Fried, was sentenced to 25 years for orchestrating one of the largest financial frauds in crypto history.
Disclaimer
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