Former Binance Chief Executive Officer, Changpeng “CZ” Zhao, is contesting a hefty $1.8 billion lawsuit filed by the now-bankrupt crypto exchange, FTX, by requesting a dismissal from a US bankruptcy court. Binance
$7.46B
is at the center of the legal battle.
This legal action revolves around a 2021 agreement where FTX utilized cryptocurrency assets to repurchase its own shares from Binance.
In a court document submitted on August 4 in Delaware, Zhao claims that the lawsuit unfairly seeks to hold him accountable for the alleged misdeeds of FTX’s founder, Sam Bankman-Fried. You can read the full August 4 court filing here.
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Zhao’s defense centers around the argument that the events associated with the share buyback transpired outside of the United States. He emphasizes that the relevant Binance entities are officially registered in locations such as Ireland, the Cayman Islands, and the British Virgin Islands.
Legal representatives for Zhao assert that US legal jurisdiction is inapplicable in this instance due to the transaction’s extraterritorial nature. They further contend that Zhao lacked direct control over or personal receipt of the involved cryptocurrency. The transaction in question employed two specific digital tokens: Binance USD (BUSD) and FTX Token (FTT).
Zhao’s lawyers argue he merely functioned as a “nominal counterparty” during the transaction, never directly receiving the funds.
FTX has also alleged that Zhao’s activity on X (formerly Twitter) played a part in their ultimate downfall. In the time immediately preceding FTX’s bankruptcy filing, Zhao publicly announced Binance’s intention to liquidate its holdings of FTT.
In response, Zhao argues that the failure of FTX stemmed from its own internal malfeasance. His official court filing characterizes FTX as “a fraudulent enterprise” and asserts that its collapse was inevitable, irrespective of his statements or actions.
In related news, a US Appeals Court recently reversed Nathaniel Chastain’s conviction related to insider trading within the OpenSea NFT marketplace. Want the details? Read the full story here.