A U.S. bankruptcy judge has allowed the FTX Recovery Trust to continue seeking $1.76 billion from Binance and Changpeng Zhao over a disputed 2021 share buyback, while dismissing other claims tied to FTX's collapse
The FTX Recovery Trust has received court approval to move forward with efforts to recover at least $1.76 billion from Binance entities and Changpeng Zhao, the founder of Binance, in connection with a 2021 share repurchase deal. The decision, issued by U.S. Bankruptcy Judge Karen B. Owens on July 24, 2026, preserves the core clawback claims against Binance Holdings Limited and related entities, while dismissing several other claims related to FTX's collapse.
Share Buyback Under Scrutiny
The dispute centers on a series of agreements executed on July 15, 2021, in which FTX repurchased Binance's roughly 20% equity stake in FTX Trading and an 18.4% stake in West Realm Shires, held by Zhao and two other individuals. The FTX Recovery Trust alleges that the consideration for these buybacks-paid in BUSD, BNB, and FTT tokens-was worth at least $1.76 billion at the time. The trust is seeking to recover either the transferred assets or their value, but the court has not yet determined liability or awarded any funds to the FTX bankruptcy estate.
Fraudulent Transfer Claims Move Forward
Judge Owens allowed five counts 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 Changpeng Zhao. These counts allege both constructive and actual fraudulent transfers. Claims against two other individuals involved in the original transaction were dismissed. The court also dismissed claims for injurious falsehood, fraud, intentional misrepresentation, and unjust enrichment related to statements made around FTX's collapse, citing the in pari delicto doctrine and rejecting the trust's arguments for an exception.
Jurisdiction and Legal Path Ahead
The court found that it has bankruptcy subject-matter jurisdiction and that the plaintiffs made an initial showing of personal jurisdiction over the Binance entities and Zhao. Judge Owens also determined that a domestic transfer was plausibly alleged at this stage, but left open the broader question of extraterritoriality for later proceedings. The court declined to compel arbitration and rejected a motion to dismiss under the Bankruptcy Code's section 546(e) safe harbor, stating that the defense was not established on the pleadings. For FTX creditors, the ruling preserves a potential path to a significant recovery, but the trust must still prove its claims, overcome any defenses, and ultimately collect any judgment or settlement.
As the FTX Recovery Trust pursues this high-profile clawback, the case highlights ongoing legal and regulatory scrutiny of major crypto exchanges. Similar concerns about exchange transparency and asset safety have surfaced in other jurisdictions, such as when Thailand's SEC accused Bitkub of concealing a major crypto theft, as reported in a recent EgonCoin article on regulatory action in Thailand.
According to court filings, the $1.76 billion figure represents the alleged value of the assets transferred in the 2021 buyback, not a court-determined valuation or an awarded sum. The FTX Recovery Trust's ability to add assets to the bankruptcy estate depends on prevailing in court and successfully enforcing any judgment. The next phases of litigation will likely focus on the factual basis for the alleged fraudulent transfers and the legal defenses available to Binance and Zhao.
Clawback actions in bankruptcy cases are designed to recover assets that were transferred out of a company prior to insolvency, especially if those transfers are deemed fraudulent or unfair to creditors. In the context of cryptocurrency, these actions can be complicated by the use of tokens as consideration, cross-border transactions, and evolving legal standards. The outcome of the FTX Recovery Trust's case against Binance and Changpeng Zhao could set important precedents for how courts handle large-scale crypto asset transfers in bankruptcy and enforcement scenarios.
