A U.S. bankruptcy judge has cleared the way for the FTX recovery trust to seek at least $1.76 billion from Binance entities and its former CEO Changpeng Zhao, ruling that claims tied to a 2021 share buyback can move forward. The decision, issued by Judge Karen B. Owens, allows the trust to pursue allegations of constructive and actual fraudulent transfer over FTX's repurchase of Binance's stake in the exchange.
What the court allowed and what it tossed
The judge dismissed four counts — injurious falsehood, fraud, intentional misrepresentation, and unjust enrichment — that centered on statements Binance and Zhao made about FTX's collapse. Those counts fell under the in pari delicto doctrine, which bars a party from suing for damages from its own wrongdoing, and the court rejected the trust's attempt to invoke the sole actor rule exception. However, the core fraudulent-transfer claims survived, meaning the trust can still argue that the 2021 buyback improperly moved assets out of FTX before its implosion.
Jurisdiction and the safe harbor fight
Judge Owens found that the court has both subject-matter and personal jurisdiction over Binance and Zhao, and she deferred a final decision on which law will govern the claims. She also rejected Binance's bid to dismiss under Section 546(e) of the Bankruptcy Code, which sometimes shields securities transactions from clawback. The court declined to compel arbitration, keeping the dispute in the bankruptcy forum.
The assets at stake
The trust alleges that the transferred assets — a mix of BUSD, BNB, and FTT tokens — were worth at least $1.76 billion. The ruling does not establish liability or award any money; the trust must still prove its fraudulent-transfer claims and obtain a judgment or settlement before any recovery. The case is part of a broader legal push by FTX's estate, which has also filed a separate $1.15 billion suit against Genesis Digital.
Binance had previously moved to quash the lawsuit, and that motion remains pending. The ruling marks a procedural win for the FTX estate, but the fight over the billions is far from over.
