Key Notes
- Binance and Changpeng Zhao subpoenaed Kevin O’Leary and other sources while defending the FTX recovery lawsuit.
- The disputed $1.76 billion relates to FTX’s July 2021 repurchase of Binance-held stakes, with fraudulent-transfer allegations still contested.
- A July 24 ruling kept the core recovery claims alive but dismissed separate state-law claims connected to FTX’s collapse.
Binance and founder Changpeng Zhao have subpoenaed “Shark Tank” investor Kevin O’Leary as they defend a lawsuit seeking to recover $1.76 billion from FTX’s purchase of their stakes in the exchange.
Bloomberg Law reported the development on November 5, citing a notice filed the previous day in the US Bankruptcy Court for the District of Delaware. The requests also involve author Michael Lewis, a former Forbes digital-assets research director and accounting firm BDO USA.
The dispute concerns money paid years before FTX entered bankruptcy. The recovery trust is trying to bring assets back into the estate for creditors, while Binance and Zhao are defending their receipt of the buyback proceeds.
O’Leary’s Links to FTX
O’Leary was both an investor in FTX and a paid spokesperson. In his Senate testimony for a December 14, 2022 hearing, he said he entered the spokesperson agreement in August 2021 and invested part of his compensation in FTX equity and tokens held on the platform.
He described writing those investments down to zero after the collapse. He also said the lost capital belonged to an operating company he fully owned, rather than to partners or outside investors whose money he managed.
The subpoenas bring another part of FTX’s public-facing business into the evidence-gathering process. Under federal discovery rules, a subpoena can require documents or electronically stored information from someone outside the lawsuit. Receiving one does not itself make that person a defendant or establish wrongdoing.
The $1.76 Billion Buyback at Issue
The FTX Recovery Trust and FTX Digital Markets are pursuing payments made in a July 2021 share repurchase. Binance had acquired a 20% stake in FTX Trading in 2019, and the later buyback also covered holdings in FTX’s US business.
The court’s July opinion describes consideration paid in FTT, BNB and BUSD. The plaintiffs allege that Alameda Research financed the transaction while the businesses were insolvent, using customer deposits to help complete it.
Binance’s side has argued that FTX paid market value for the repurchased shares. The court treated that as a factual issue for later examination.
Court Kept the Core Recovery Claims Alive
Chief Bankruptcy Judge Karen B. Owens issued a split ruling on July 24. The core fraudulent-transfer claims survived against four Binance entities and Zhao, while separate state-law claims tied to FTX’s November 2022 collapse were dismissed.
The decision allowed the surviving case to continue; it did not award the trust $1.76 billion. The document requests are another step toward developing the evidence on which those contested claims will be decided.
FTX-related recoveries have also involved asset sales. CoinScreamer previously reported how proceeds from government-forfeited Anthropic shares were transferred to the bankruptcy estate to compensate victims. The Binance litigation represents a further effort to recover value through the courts.
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