CZ Pursues Dismissal Of “Absurd” $1.76B FTX Clawback Lawsuit

The previous CEO of Binance, Changpeng ‘CZ’ Zhao, has initiated a motion to dismiss a legal action from FTX that seeks to recover almost $1.8 billion. 

On 10 November 2024, Sam Bankman-Fried’s FTX launched a lawsuit against its rival Binance and CZ. This legal action demands compensation, alleging that Binance played a significant role in its collapse.

Nonetheless, a filing made on 4 August 2025 on Zhao’s behalf states, “Plaintiffs absurdly attribute Mr Zhao’s and others’ accountability to Mr Bankman-Fried’s shortcomings.”

Zhao characterizes the allegation as “legally baseless” and “utterly nonsensical.” His legal representatives argued that “although Plaintiffs and Binance were adversaries, they were also momentarily business associates when the Binance Defendants held about a 20% stake in FTX Trading. However, Zhao and Bankman-Fried were unable to collaborate, leading to their parting of ways.”

BREAKING: Binance co-founder CZ requests dismissal from the $1.8B FTX litigation.

He just informed the US court that it lacks jurisdiction over him, as he resides in the UAE and the case pertains to offshore transactions.

If this is upheld, CZ may exit unscathed. pic.twitter.com/wBdQw7YRdb

— Crypto Patel (@CryptoPatel) August 6, 2025

Discover: FTX Declares War On Binance And Zhao For Triggering A Liquidity Crisis

FTX Lacks Jurisdiction Over UAE Citizen CZ

The central argument from Zhao’s legal team is that the US court has no jurisdiction over him, as he is a citizen and resident of the United Arab Emirates (UAE). The motion claims that the matter is considerably detached from the US, as both the transactions and involved entities were offshore.

Zhao’s attorneys also contended that he was not a direct recipient of the disputed funds. 

The legal representatives characterized CZ as a “nominal counterparty” in the transaction, implying that he did not have direct possession or authority over the crypto asset exchanged. The deal involved Binance (BUSD) and FTX token (FTT).

On the other hand, FTX, currently overseen by a team aiming to repay creditors, claims that the 2021 share buyback was financed with customer funds, constituting a fraudulent transfer.

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FTX Declares War On Binance And Zhao For Triggering A Liquidity Crisis

FTX was once among the largest crypto asset trading platforms globally but filed for bankruptcy in November 2022. Exposures of financial mismanagement and fraud are primarily responsible for its downfall.

Significantly, the company’s collapse resulted in billions lost for investors and undermined public trust in digital currencies.

The lawsuit accuses Binance and its ex-CEO Changpeng Zhao of actions that worsened FTX’s financial distress.

In particular, FTX argues that Binance’s choice to divest a significant portion of its FTT holdings—the native crypto token of FTX—triggered a market fluidity crunch that eventually led to FTX’s downfall. In early November 2022, Zhao announced publicly that Binance would liquidate its entire FTT position due to “recent findings” concerning FTX’s financial situation.

Related: Former FTX Executive Nishad Singh Receives No Prison Time, Ordered To Forfeit $11 Billion

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