Changpeng "CZ" Zhao, the former CEO of Binance, has requested that the Delaware Bankruptcy Court dismiss the lawsuit filed by FTX against him. He argues that, among other reasons, the court lacks jurisdiction because CZ is not a resident of the United States or Delaware.
FTX is attempting to recover $1.76 billion from Binance, which was transferred between the two companies under unclear circumstances.
Why is FTX trying to sue CZ?
The collapse of FTX has left many consequences in the cryptocurrency industry, and this story occasionally reappears in strange ways. Today, it emerges once again.
According to a recent report, CZ has filed a request for the Delaware Bankruptcy Court to dismiss the FTX lawsuit, which is attempting to recover $1.76 billion that Sam Bankman-Fried sent to Binance:
"These claims are too far removed from Delaware, and even the United States, such that the relevant laws, without extraterritorial application, cannot be applied," CZ stated. Specifically, this argument asserts that CZ's residence in the UAE makes Delaware an inappropriate venue for resolving this lawsuit.
CZ also argues that foreign transactions are not protected by US bankruptcy law. He describes himself as a "nominal partner" in the alleged transaction, which occurred across three legal jurisdictions outside the United States.
Looking at the Truth
Changpeng "CZ" Zhao, the former CEO of Binance, has a complicated history with FTX for many years. In 2023, FTX sued him claiming his social media posts damaged the company's reputation.
In 2022, Binance was called as a witness against FTX in a UK court. At that time, CZ was still running the company.
In fact, Sam Bankman-Fried has consistently blamed CZ for the liquidation crisis that forced FTX to close.
Last year, the company filed a lawsuit, alleging that Bankman-Fried improperly transferred $1.76 billion to Binance. Since then, the lawsuit has not made much progress.
CZ's lawsuit claims that FTX was a "short-term business partner" with Binance, and that FTX "unreasonably blames" Binance and its employees for their own misconduct.
It is unclear how effective this argument will be, but two other former Binance executives have also requested to be removed from this lawsuit. Currently, it seems to be a waiting game.
