CZ Moves to Dismiss FTX’s $1.8 Billion Crypto Lawsuit

New shockwave within the cryptosphere ! Binance founder Changpeng Zhao (known as CZ) is trying to cancel a colossal 1.8 billion dollar lawsuit filed by FTX. A legal maneuver that rekindles tensions between two fallen giants of the crypto sector.

A 1.8 billion crypto lawsuit amid fraud and grey areas

Filed before a Delaware court, the FTX lawsuit accuses Binance and CZ of having received in 2021 a fraudulent transfer of 1.8 billion dollars in stablecoins (BUSD) and FTT tokens as part of a stock buyback. According to FTX liquidators, the funds used came directly from clients’ deposits illegally diverted.

Faced with this lawsuit, Zhao counterattacks. He claims that the plaintiffs do not allege that he received or controlled the transferred assets. He therefore presents himself as a mere passive actor in the transaction. Even more, his lawyers point out that the agreement took place outside the United States (more precisely between the Cayman Islands, the BVI and Ireland). Which renders the American jurisdiction incompetent.

This case highlights the legal opacity of some cross-border crypto transactions, often facilitated by offshore structures. For Zhao, this attack aims to divert attention from the massive fraud orchestrated by Sam Bankman-Fried. The fallen crypto billionaire is now sentenced to 25 years in prison.

CZ defends himself and accuses FTX of diverting attention

Another sensitive point: the role of Zhao’s posts on X in autumn 2022. For FTX, his messages announcing the sale of FTT by Binance triggered a rush on withdrawals. Which led to the collapse of the crypto company. Obviously, the defense rejects this argument. According to it, FTX was a fraudulent system doomed to fail.

CZ’s defense thus tries to reverse the logic of the accusation. According to it, holding him responsible would be like accusing a whistleblower of having brought down a Ponzi scheme. Recall that Zhao himself served a 4-month prison sentence for violations related to money laundering.

In any case, the lawsuit between FTX and CZ crystallizes the weaknesses of a still unstable crypto ecosystem. Between extraterritorial justice, offshore arrangements and alleged manipulations, this case could set a major precedent for the future of global crypto regulation.