TLDR:
- Binance faces $1.76B clawback claim over FTX’s 2021 share repurchase using customer funds.
- Zhao argues Delaware courts lack jurisdiction due to his UAE residence and offshore entities.
- Binance cites safe-harbor rules for securities transfers to counter FTX’s fraud claims.
- The case could define U.S. bankruptcy reach over global crypto transactions and offshore gains.
Binance is locked in a fierce legal fight. FTX’s estate is demanding nearly $1.8 billion back. The claim centers on a 2021 share repurchase. Binance’s founder, Changpeng Zhao, has filed to drop the case. The stage is set for a jurisdictional showdown.
FTX Digital Markets Ltd. alleges that in July 2021, Binance and Zhao benefited from a $1.76 billion fraudulent transfer. That deal came via Alameda Research, using FTT, BNB, and BUSD tokens.
At the time, Alameda was insolvent and funded the deal with customer funds. It makes up the core of the clawback suit.
The trust argues both constructive and intentional fraud under U.S. Bankruptcy Code sections. They claim the transaction was part of Bankman‑Fried’s broader scheme to misappropriate deposits.
Binance Pushes Back
Zhao filed a motion in Delaware bankruptcy court on August 4, 2025. He argues the court lacks jurisdiction over him. He lives in the UAE, not Delaware or the U.S. The trust’s claims, he says, are “so far removed” they fall outside legal reach.
Zhao calls himself a “nominal counterparty.” He insists the entity structure and offshore routing place the transfer outside U.S. law. He also contests that FTX’s lawsuit misapplies safe‑harbor protections tied to securities transfers.
FTX’s filing frames Alameda’s payment as knowingly improper. Caroline Ellison later testified they lacked resources and used customer deposits anyway. Bankman‑Fried dismissed those concerns and pushed ahead. The asset backing of the share repurchase was illusory from the start.
Binance counters that the structure was internationally executed. Its firms reside in Ireland, the Cayman Islands, and BVI. The trust cannot allege Zhao was ever legally “at home” in Delaware. Serving U.S. counsel on him, they argue, violates rules for foreign defendants.
Stakes and Context
FTX was once a top exchange. Its collapse wiped out over $8 billion in customer deposits. The trust is now trying to claw back funds tied to senior executives and outside parties. This suit is a key part of that effort.
Zhao faces past legal issues too. He served four months in prison for U.S. anti‑money‑laundering violations. Bankman‑Fried is serving 25 years for fraud. Their dueling motions now focus on this civil liability fight over jurisdiction and fault.
This case will test whether U.S. bankruptcy courts can reclaim offshore crypto gains tied to alleged bankruptcy fraud. Binance insists the suit fails on technical and jurisdictional grounds. Meanwhile, FTX’s estate pushes forward, seeking major recovery for creditors. Investors and crypto watchers should watch closely.
