- CZ files to dismiss FTX’s $1.76B clawback suit, citing lack of U.S. jurisdiction.
- Transaction allegedly occurred via foreign entities in BVI, Ireland, and Cayman Islands.
- Dismissal could block FTX’s attempt to recover offshore funds.
Changpeng “CZ” Zhao has asked the U.S. Bankruptcy Court in Delaware to dismiss a $1.76 billion clawback lawsuit filed by the FTX estate, arguing that the court lacks jurisdiction over foreign entities and non-domestic transactions. The motion, filed on August 4 and reported by Bloomberg Law, is the latest development in the legal fallout from the collapse of FTX.
The lawsuit centers on a July 2021 deal in which FTX allegedly sent $1.76 billion through Alameda Research to buy back equity from Binance. CZ claims the transaction was executed entirely between offshore entities registered in the British Virgin Islands, Ireland, and the Cayman Islands, placing it outside the reach of U.S. bankruptcy statutes.
Zhao’s legal team maintains that he resides in the United Arab Emirates and has no meaningful connection to Delaware or the United States. They argue that the U.S. court cannot assert jurisdiction simply by serving U.S.-based legal counsel. The motion also describes Zhao as a “nominal counterparty” in the deal and asserts that the complaint seeks to assign him responsibility for internal failures within FTX.
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Executives exit, sentences served, and what comes next
Two former Binance executives named in the same case, Samuel Wenjun Lim and Dinghua Xiao, filed similar motions last month to be removed from the lawsuit. FTX initiated the legal action in 2024, claiming financial losses and reputational harm as part of its efforts to recover assets following its 2022 collapse.
Zhao recently completed a four-month prison sentence in the United States after pleading guilty to anti-money laundering violations. Sam Bankman-Fried, the former CEO of FTX, is currently serving a 25-year sentence for fraud and conspiracy.
The Delaware court will now consider whether Zhao’s motion warrants dismissal of the case. If granted, it could limit the FTX estate’s ability to reclaim billions tied to offshore transfers.
