Changpeng Zhao Challenges $1.76B FTX Lawsuit

Changpeng Zhao filed a motion on August 5, 2025, in Delaware bankruptcy court asking a judge to throw out a $1.76 billion clawback lawsuit from the FTX bankruptcy trust, Bloomberg reports. Zhao argues the court lacks jurisdiction over him and the trust’s legal claims are flawed.

The former Binance CEO contends he cannot be sued in Delaware because he lives in the United Arab Emirates. His lawyers say the bankruptcy statutes cited in the lawsuit do not apply outside U.S. borders. Zhao also claims the trust improperly served legal papers through his U.S. lawyers, violating bankruptcy court rules.

The trust filed the original lawsuit in November 2024, trying to recover money from a July 2021 deal. In that transaction, Binance sold about 20% of FTX International and 18.4% of the U.S. exchange to Alameda Ltd., a British Virgin Islands company that FTX allegedly funded.

Zhao calls himself a “nominal counterparty” in his court filing. He says the trust “nonsensically blames” him for FTX’s collapse. His motion states that the trust cannot prove “constructive fraud” claims because securities contracts have legal protections.

The claims are so far removed from Delaware, and even the United States, that the statutes at issue, which lack extraterritorial application, do not even apply,

Zhao wrote in court papers.

Meanwhile, FTX’s bankruptcy estate plans to distribute another $1.9 billion to creditors starting September 30, 2025. These payments mark the third round of distributions since the exchange collapsed.

FTX filed for bankruptcy in November 2022 after running out of money and exposing how executives mixed customer funds with company assets. The bankruptcy estate has sued multiple former partners, including Binance, Crypto.com, Bybit, and political group FWD.US, to recover money for defrauded customers.

Zhao served four months in prison after pleading guilty to anti-money laundering violations. FTX founder Sam Bankman-Fried is serving a 25-year sentence for fraud and conspiracy related to the exchange’s collapse.