Binance and its founder and former CEO, Changpeng Zhao, have subpoenaed “Shark Tank” investor Kevin O’Leary and author Michael Lewis for records and information in a $1.76 billion clawback lawsuit, Bloomberg Law reported Nov. 5, citing a notice filed Nov. 4 in the U.S. Bankruptcy Court for the District of Delaware.
The subpoenas also reached former Forbes Digital Assets Research Director Steven Ehrlich and accounting and audit firm BDO USA PC, according to the report, which described requests for “a host of records and information.”
FTX Recovery Trust Pursues Clawback
FTX Recovery Trust, which pursues recoveries for creditors, and FTX Digital Markets Ltd. are pursuing the action against Binance and Zhao. A successful clawback would return assets to the plaintiffs for administration through the recovery process.
The trust has also filed a $1.15 billion clawback lawsuit against Genesis Digital Assets and affiliates, alleging that Alameda-funded investments involved misappropriated customer money.
O’Leary’s FTX Role and Lewis’s Research
O’Leary was both an FTX investor and a paid spokesperson before the exchange failed in November 2022. The following month, he disclosed an FTX promotional agreement worth approximately $15 million and said he had put about $9.7 million into cryptocurrency. He also described holding more than $1 million in FTX equity, which he said had become worthless following the bankruptcy.
Lewis, known for “The Big Short,” spent considerable time with FTX co-founder Sam Bankman-Fried while researching “Going Infinite: The Rise and Fall of a New Tycoon.” The book was released in October 2023, nearly a year after FTX filed for bankruptcy.
Disputed Share Repurchase at Center of Case
The lawsuit, filed in November 2024, centers on a disputed share repurchase agreed to in July 2021. It covered a 20% stake in FTX’s international business and an 18.4% stake in its U.S. parent company. The estate alleged that Alameda Research, Bankman-Fried’s trading firm, funded the transaction while FTX was already insolvent.
Payment took the form of FTX’s FTT token, Binance’s BNB token, and BUSD, a dollar-pegged stablecoin. The plaintiffs characterized the transaction as a fraudulent transfer and sought to recover at least $1.76 billion. Binance and Zhao contested the allegations and sought dismissal.
July Ruling Allowed Claims to Proceed
Chief U.S. Bankruptcy Judge Karen B. Owens’ opinion allowing the recovery claims to proceed was dated July 24. She dismissed the fraudulent-transfer counts against former Binance executives Samuel Wenjun Lim and Dinghua Xiao, along with separate claims brought under state law against the Binance defendants.
The remaining recovery allegations against Zhao and four Binance entities survived those dismissal requests, leaving the repayment dispute unresolved.
