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

Binance founder Changpeng Zhao (known as CZ) is attempting to dismiss a colossal $1.8 billion lawsuit filed by FTX. This legal maneuver reignites tensions between two fallen giants of the crypto sector.

In Brief

• Changpeng Zhao disputes the FTX lawsuit, denying any control over the $1.8 billion transferred.
• Zhao rejects all responsibility in the fall of FTX, describing it as a fundamentally fraudulent company.

A $1.8 Billion Crypto Lawsuit Amid Fraud and Grey Areas

Filed before a Delaware court, the FTX lawsuit accuses Binance and CZ of receiving in 2021 a fraudulent transfer of $1.8 billion in stablecoins (BUSD) and FTT tokens as part of a stock buyback. According to FTX liquidators, the funds used came directly from clients’ deposits that were illegally diverted. Facing this lawsuit, Zhao counterattacks. He claims the plaintiffs do not allege that he received or controlled the transferred assets, presenting himself as a mere passive actor in the transaction. Furthermore, his lawyers highlight that the agreement took place outside the United States (specifically between the Cayman Islands, the British Virgin Islands, and Ireland), which challenges the jurisdiction of the American court. This case underscores the legal opacity of some cross-border crypto transactions, often facilitated by offshore structures. For Zhao, this lawsuit is an attempt to divert attention from the massive fraud orchestrated by Sam Bankman-Fried, the fallen crypto billionaire now sentenced to 25 years in prison.

CZ Defends Himself and Accuses FTX of Diverting Attention

Another sensitive point is the role of Zhao’s posts on X (formerly Twitter) in autumn 2022. FTX claims his messages announcing Binance’s sale of FTT triggered a rush on withdrawals, leading to the collapse of the crypto company. The defense rejects this argument, asserting that FTX was a fraudulent system doomed to fail.

CZ’s defense tries to reverse the logic of the accusation. Holding him responsible would be like blaming a whistleblower for bringing down a Ponzi scheme. Notably, Zhao himself served a 4-month prison sentence for violations related to money laundering.

The lawsuit between FTX and CZ highlights the vulnerabilities of an 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.

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Originally published at Cointribune on Wed, 06 Aug 2025.

Frequently Asked Questions (FAQ)

Legal Proceedings and Defenses

Q: What is the basis of the lawsuit filed by FTX against CZ? A: FTX liquidators accuse Binance and CZ of receiving a fraudulent transfer of $1.8 billion in stablecoins (BUSD) and FTT tokens in 2021, allegedly stemming from diverted client deposits. Q: How is CZ defending himself against the lawsuit? A: CZ's defense argues that the lawsuit does not allege he personally received or controlled the transferred assets. His legal team also challenges the jurisdiction of the American court, citing that the transaction occurred outside the U.S. between offshore entities. Q: What is CZ's stance on FTX's collapse? A: CZ attributes FTX's downfall to its own fraudulent system, orchestrated by Sam Bankman-Fried, and claims his actions were akin to a whistleblower exposing a Ponzi scheme. Q: What role did CZ's social media activity play in the lawsuit? A: FTX claims CZ's posts announcing Binance's sale of FTT triggered a bank run, leading to FTX's collapse. CZ's defense disputes this, stating FTX was inherently unstable. Q: Has CZ faced any legal consequences in the past? A: Yes, CZ served a 4-month prison sentence for violations related to money laundering.

Crypto Market and Regulation

Q: What does this lawsuit highlight about the crypto industry? A: The case underscores the legal complexities and potential vulnerabilities within the crypto ecosystem, particularly concerning cross-border transactions, offshore structures, and alleged market manipulations. Q: What could be the broader implications of this case? A: This lawsuit has the potential to set a significant precedent for the future of global cryptocurrency regulation.

Crypto Market AI's Take

The legal battles involving major players like CZ and FTX highlight the inherent risks and complexities within the cryptocurrency market. These cases often bring to light the intricate web of offshore transactions and the challenges in regulating a rapidly evolving digital asset space. At Crypto Market AI, we focus on providing clarity and actionable insights amidst such volatility. Our platform leverages advanced AI to analyze market trends, detect potential risks, and offer tools for more informed trading decisions. Understanding the regulatory landscape and the legal implications of transactions is crucial for navigating this market, and we strive to keep our users informed about these critical developments.

More to Read:

• Sam Bankman-Fried's Sentencing
• FTX Token (FTT) Analysis
• Global Crypto Regulation Outlook