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- CZ argues the U.S. court has no right to hear FTX’s $1.8 billion lawsuit and says he was not properly served.
- FTX claims the 2021 Binance deal was a fraudulent transfer and blames CZ for damaging the exchange’s reputation.
Changpeng “CZ” Zhao, the co-founder of Binance, has asked a U.S. court to throw out a lawsuit from FTX’s bankruptcy estate. The case involves a 2021 deal worth $1.8 billion, accusing CZ of helping to bring down the now-defunct crypto exchange.
CZ Says Court Has No Right to Handle FTX Claim
In a motion filed on August 4, Zhao argued that the court does not have the right to hear the case. His lawyers also said the legal notice was not properly delivered. CZ lives in the United Arab Emirates, but the lawsuit was handed to his U.S. legal team. According to the motion, that does not meet the rules for serving someone living abroad.
It is worth noting that the lawsuit is tied to a share buyback deal between FTX and Binance in 2021. FTX claims the deal was funded by Alameda Research, which was closely linked to FTX, and says it was done in bad faith. The estate believes the money should be returned.
FTX also blames CZ for playing a role in its collapse, pointing to his tweets and public comments in 2022. The FTX lawyers argued that this hurt confidence in the company and triggered its financial crisis.
Zhao denied this, saying Binance and FTX were no longer partners at that time. He also said Binance’s sale of FTX’s FTT tokens happened openly and was not part of any plan to harm the company.
In another update, CNF reported that a WSJ report claims Binance co-founder CZ acted as a fixer for Trump’s World Liberty Financial and linked the project to foreign groups. While CZ has denied the claims, calling the report false, it shows how the Binance founder is a top target of high-profile legal and media profiling.
FTX Targets Others as It Tries to Recover Lost Funds
It is important to add that FTX is not only going after CZ. It has filed lawsuits against several other former partners. These include Anthony Scaramucci, KuCoin, Crypto.com, Bybit, and FWD.US, a group linked to Facebook founder Mark Zuckerberg.
The exchange is trying to recover as much money as possible to repay users and creditors. It has announced a third round of repayments, starting on September 30.
The case against CZ is now one of the largest parts of this recovery effort. How the court responds to his request to dismiss the case could shape the next steps for both Binance and what remains of FTX.
As we mentioned in our previous news brief, FTX has received court approval to reduce the amount it set aside for disputed claims by $1.9 billion. This essentially clears the way for its next round of payments to creditors and customers.