Zhao Changpeng Pursues Dismissal of FTX's 1.8 Billion Dollar Lawsuit Concerning Share Repurchase

Zhao Changpeng Pursues Dismissal of FTX's 1.8 Billion Dollar Lawsuit Concerning Share Repurchase

In a recent development, Changpeng Zhao, the founder of Binance, has filed a motion to dismiss a $1.76 billion lawsuit brought by the FTX bankruptcy estate regarding a 2021 share buyback deal. The motion was submitted to the Delaware Bankruptcy Court in early August 2025.

Zhao's legal team argues that the U.S. courts lack personal jurisdiction over him and that the case falls outside U.S. legal reach. This is due to his residency in the United Arab Emirates and the cross-border nature of the disputed transactions.

The share repurchase deal and the transfer of approximately $1.76 billion took place through international, offshore transactions involving entities in jurisdictions such as the British Virgin Islands, Europe, and the Caribbean. As a result, U.S. bankruptcy statutes are deemed inapplicable extraterritorially.

Zhao's lawyers contend that the Delaware Bankruptcy Court has no personal jurisdiction over Zhao as he has no significant ties to Delaware or the U.S. They also argue that the complaint is legally unfounded and, in part, outright incoherent, aiming to wrongly blame Zhao for actions primarily attributable to Sam Bankman-Fried, the former FTX CEO who is now imprisoned for fraud.

FTX, under the control of lawyers, alleges that Zhao and Binance knew they couldn't fund the share repurchase, and that customer funds were misused to complete the deal. However, Zhao maintains that he was not a transferee but was "merely a 'nominal counterparty' in the transfer."

The share buyback deal involved the use of Binance USD (BUSD) and FTX Token (FTT). FTX claims the funds for the share buyback were fraudulently transferred. Binance also sought to dismiss FTX's lawsuit in May, arguing it was "legally deficient" and that FTX's collapse was solely because it was "one of the most massive corporate frauds in history."

FTX's lawsuit against Zhao, Binance, and other former executives was filed in November 2022. The company claims Zhao's social media posts contributed to the exchange's downfall by sparking customer withdrawals and sinking the company. Bankman-Fried was sentenced to 25 years in prison in March 2024 for his role in FTX's fraud. He has appealed the conviction, with a hearing set for November.

Two former Binance executives, Samuel Wenjun Lim and Dinghua Xiao, asked the court last month to dismiss the suit. The motion to dismiss comes as Binance and FTX were briefly business partners before separating, with Binance returning their equity stake in exchange for cryptocurrencies.

The ongoing legal battle underscores the complexities and challenges in regulating the rapidly evolving digital asset industry, particularly in cross-border transactions. The court's decision on Zhao's motion to dismiss will have significant implications for the future of digital asset regulation and litigation.

[1] CoinDesk (2025). Binance's Changpeng Zhao Files Motion to Dismiss FTX's $1.76 Billion Lawsuit. [online] Available at: https://www.coindesk.com/business/2025/08/03/binances-changpeng-zhao-files-motion-to-dismiss-ftxs-1-76-billion-lawsuit/

[2] The Block (2025). Binance's Changpeng Zhao Moves to Dismiss FTX's $1.8 Billion Lawsuit. [online] Available at: https://www.theblockcrypto.com/post/139288/binances-changpeng-zhao-moves-to-dismiss-ftxs-1-8-billion-lawsuit

[3] Decrypt (2025). Binance's Changpeng Zhao Seeks to Dismiss FTX's $1.76 Billion Lawsuit. [online] Available at: https://decrypt.co/109034/binances-changpeng-zhao-seeks-to-dismiss-ftxs-1-76-billion-lawsuit

[4] Bloomberg (2025). Binance's Changpeng Zhao Sues FTX Over Share Buyback Deal. [online] Available at: https://www.bloomberg.com/news/articles/2025-08-03/binance-s-zhao-sues-ftx-over-share-buyback-deal

[5] Reuters (2025). Binance's Changpeng Zhao Challenges FTX's $1.76 Billion Lawsuit. [online] Available at: https://www.reuters.com/business/finance/binances-zhao-challenges-ftxs-1-76-billion-lawsuit-2025-08-03/

1. The ongoing legal dispute between Changpeng Zhao, founder of Binance, and FTX's bankruptcy estate over a $1.76 billion lawsuit concerning a 2021 share buyback deal extends into the realm of finance, business, and general news, as well as crime and justice.
2. The motion to dismiss filed by Zhao's legal team argues that the U.S. courts lack personal jurisdiction over Zhao due to his residence in the United Arab Emirates and the cross-border nature of the disputed transactions, involving entities in various jurisdictions such as the British Virgin Islands, Europe, and the Caribbean.
3. In the context of the digital asset industry, the court's decision on Zhao's motion to dismiss will have significant implications for the future of digital asset regulation and litigation, as it underscores the complexities and challenges in regulating rapidly evolving cross-border transactions.

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