Binance Expands Discovery in $1.76B FTX Case
Binance Holdings Ltd. and founder Changpeng Zhao have issued subpoenas to Kevin O’Leary, author Michael Lewis and other outside parties while contesting a lawsuit seeking at least $1.76 billion tied to FTX’s 2021 repurchase of Binance-held interests in the exchange.
The discovery requests place a former FTX promoter and an author who chronicled Sam Bankman-Fried’s rise and collapse within a creditor-recovery dispute that remains active against Binance and Zhao.
What happened
Bloomberg Tax reported that Binance and Zhao subpoenaed O’Leary, Lewis, former Forbes digital-assets research director Steven Ehrlich or Steven Elrlich, and accounting firm BDO USA PC for records. The report described the subpoenas as part of litigation seeking to recover $1.76 billion allegedly transferred fraudulently by Bankman-Fried.
Cryptotimes reported that the requests form part of discovery in a case brought by the FTX Recovery Trust. Financefeeds likewise reported that the subpoenas cover O’Leary, Lewis and BDO USA in the trust’s recovery action.
The dispute concerns a July 2021 share repurchase. According to Bitcoin.com News, the transaction covered a 20% stake in FTX’s international business and an 18.4% stake in its U.S. parent company. Cryptotimes identified the international business as FTX Trading Ltd. and the U.S. parent as West Realm Shires Inc.
Bitcoin.com News reported that the buyback was allegedly funded by Alameda Research while FTX was already insolvent, with payment made in FTT, BNB and BUSD. Cryptotimes similarly reported that the transaction involved FTT, BNB and BUSD, describing FTT as FTX’s exchange token, BNB as the native token of the BNB Chain ecosystem, and BUSD as a stablecoin pegged to the U.S. dollar.
O’Leary was both an FTX investor and paid spokesperson before the exchange failed in November 2022, Bitcoin.com News reported. The subpoena to Lewis reaches an author whose book Going Infinite, released in October 2023, documented Bankman-Fried and FTX, according to the background provided by Bitcoin.com News.
Why it matters
The subpoenas broaden the pool of people and organizations from which Binance and Zhao are seeking records as they defend against the recovery claim. The action is not limited to companies directly named in the alleged 2021 transaction, but also reaches individuals connected to FTX’s public promotion and its subsequent account in published reporting.
The $1.76 billion figure is central to the case because the FTX Recovery Trust is seeking to return assets for creditors by unwinding the buyback, according to the background reported by Bitcoin.com News. The trust contends that FTX’s repurchase of Binance’s stake was a fraudulent transfer, Cryptotimes reported.
The suit has already survived an important stage against Binance and Zhao. Bitcoin.com News reported that Bankruptcy Judge Karen B. Owens issued an opinion dated July 24 allowing recovery claims against Zhao and four Binance entities to proceed.
That opinion also dismissed fraudulent-transfer counts against former Binance executives Samuel Wenjun Lim and Dinghua Xiao, as well as separate state-law claims, according to Bitcoin.com News. Cryptotimes reported that Lim and Xiao held the 18.4% interest in West Realm Shires, the parent of FTX US.
The differing treatment of the claims underscores that the case remains focused on particular defendants and allegations rather than a single undifferentiated claim against every person associated with the 2021 buyback.
Background and context
The clawback suit was filed in November 2024 by the FTX Recovery Trust and FTX Digital Markets Ltd., according to the background reported by Bitcoin.com News. Its stated aim is to return assets for creditors through an effort to unwind Binance-held FTX stakes that were repurchased in 2021.
Binance had acquired its roughly 20% interest in FTX Trading Ltd. in 2019, Cryptotimes reported. The subsequent repurchase is the transaction now under challenge in the recovery action.
Bankruptcy Judge Owens’ July ruling kept the $1.76 billion claim alive against Binance and Zhao, according to the background reported by Bitcoin.com News. The newly reported subpoenas therefore come while the principal recovery claims against them remain pending.
There is a minor discrepancy in reporting on the identity of the former Forbes researcher. Bloomberg Tax rendered the name as Steven Elrlich, while Bitcoin.com News used Steven Ehrlich. The available reports also do not establish whether the subpoenas were served during the prior week or were only formally noticed in court records around that period.
What to watch
The immediate question is what records Binance and Zhao seek from O’Leary, Lewis, BDO USA and the former Forbes researcher, and how those parties respond to the requests. Bloomberg Tax reported the requests were for records, but the available reports do not detail their full scope.
It will also be important to follow whether the FTX Recovery Trust challenges any of the subpoenas, and whether court filings clarify how the requested materials relate to the alleged 2021 transfer. Neither outcome is established in the reports.
Further proceedings may also provide clarity on the name of the former Forbes staffer and on the timing of service or notice for the subpoenas. The reports agree that discovery activity is underway, but they do not resolve those narrower details.
