CZ strives for dismissal of $ 1.76b FTX Clawback

Changpeng “CZ” Zhao has asked an American bankruptcy court to reject the $ 1.76 billion Clawback

The request was submitted on 4 August in the Delaware bankruptcy court, according to a report By Bloomberg Law. The lawsuit revolves around a share purchasing of July 2021 between FTX and Binance, in which FTX reportedly sent $ 1.76 billion, via Alameda Research, to buy back equity from Binance.

FTX’s bankruptcy claims that the transaction was inappropriate and tries to reclaim the money under the American bankruptcy legislation. Zhao argues that the deal was completely kept by foreign entities, including companies on the British Virgin Islands, Ireland and the Cayman Islands, which places it out of the reach of the American statutes.

Jurisdictional Challenge and Defense

Zhao’s legal team said that he lives in the United Arab Emirates and does not have meaningful ties with Delaware or the United States. The motion claims that the US Bankruptcy Act does not apply to the alleged transfers, which were not domestic, and that serving the American legal adviser at a foreign party is not sufficient under the law.

Zhao described himself as a “nominal counterparty” in the transaction and said that the complaint is trying to keep him unfairly responsible for the internal mistakes of FTX. Two former Binance leaders mentioned in the same case, Samuel Wenjun Lim and Dinghua Xiao, were also submitted to be removed from the court case last month.

FTX collapses legal fighting

This is one of the many legal confrontations arising from the collapse of FTX 2022. FTX’s bankruptcy estate estimated Binance and Zhao in 2024, looking for funds and claiming reputation damage.

CZ itself has to deal with legal problems, arguing guilty of the American anti-money laundering violations and the serving of a four-month punishment, while Sam Bankman-Geldruurt serves 25 years for fraud.