His lawyers say the US Bankruptcy Court for the District of Delaware lacks power to decide this fight. If the judge agrees, FTX may have to find a new venue or refile elsewhere.
Those jurisdiction rules matter when you’re chasing a humongous amount of money like $1.76 billion. FTX says the money flowed from a share purchase deal in 2021.
Binance snapped up those shares just as FTX was heading toward insolvency. Zhao’s team calls that claim weak. They claim it falls outside US laws because the deal and his actions mostly took place overseas.
He argues that the regulations at issue don’t apply to someone living in the UAE. Reports have disclosed that he challenged what lawyers call “constructive fraud” counts.
Those counts hinge on federal definitions tied to securities contracts, Zhao’s filing says.
FTX first sued Binance and Zhao back in November 2024. At that time, a Binance spokesperson blasted the effort as “meritless.”
They said the trust was trying to shift blame for FTX’s collapse onto Binance and its founder.
Binance already filed a similar motion to dismiss in May. That earlier paper noted FTX blamed Binance for “pervasive malfeasance” by Sam Bankman-Fried.
That May motion raised many of the same points now front and center. It highlighted that FTX’s lawyers pointed to emails and wire transfers routed through US banks.
Binance replied that those links aren’t enough. They argued simple financial messages don’t create a business “presence” in Delaware.
Meanwhile, FTX trust attorneys are expected to push back. They’ll stress that billions of dollars moved through US accounts. They’ll say those wires and phone calls establish jurisdiction under longstanding rules.
The court’s decision on this procedural step could stretch on for months.
Featured image from Horacio Villalobos Corbis/Getty Images, chart from TradingView
