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FTX recovery trust can pursue $1.76B clawback from Binance buyback
A U.S. bankruptcy judge kept the core clawback claims alive while dismissing some related causes of action, leaving liability and any recovery amount undecided.
The FTX Recovery Trust can continue efforts to recover at least $1.76 billion that FTX alleges it transferred to Binance-related parties in a 2021 share repurchase, according to CryptoSlate. A July 24 ruling by U.S. Bankruptcy Judge Karen B. Owens preserved the trust’s main clawback claims but did not decide liability or award money to the estate.
The case centers on seven agreements executed July 15, 2021, tied to the repurchase of Binance’s roughly 20% stake in FTX Trading and an 18.4% stake in West Realm Shires held by Changpeng Zhao, Dinghua Xiao, and Samuel Wenjun Lim. The trust alleges the consideration consisted of BUSD, BNB, and FTT tokens, and it seeks recovery of property or its value based on the claimed amount of at least $1.76 billion.
Owens allowed Counts I through V to proceed against Binance Holdings Limited, Binance Capital Management Co. Ltd. (now Digital Anchor Holdings Limited), Binance Holdings (IE) Limited, Binance (Services) Holdings Limited, and Zhao, with the counts asserting constructive and actual fraudulent transfers. The court dismissed the relevant counts against Xiao and Lim.
At the same time, the judge dismissed Counts VI through IX, which included claims for injurious falsehood, fraud, intentional misrepresentation, and unjust enrichment tied to statements related to FTX’s collapse. She also rejected a safe harbor dismissal under section 546(e) because the defense was not established on the pleadings, declined to compel arbitration, and deferred further issues such as a final choice-of-law decision and broader extraterritoriality questions as the record develops.
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