Binance and CZ Subpoena Kevin O’Leary and Michael Lewis in $1.76 Billion FTX Lawsuit
Binance and its founder and former CEO Changpeng Zhao, known as CZ, have subpoenaed investor Kevin O’Leary, author Michael Lewis and several other parties as part of a $1.76 billion lawsuit filed by entities seeking to recover funds connected to FTX before its collapse.
Bloomberg Law reported on November 5 that the subpoenas were issued in connection with a notice filed on November 4 in the U.S. Bankruptcy Court for the District of Delaware. The requests seek records and information from O’Leary, Lewis, former Forbes Digital Assets Research Director Steven Ehrlich, and accounting and audit firm BDO USA PC.
The legal action is being pursued by FTX Recovery Trust, which manages efforts to recover assets for creditors, and FTX Digital Markets Ltd. The dispute centers on payments made before FTX entered bankruptcy in November 2022.
Why Kevin O’Leary and Michael Lewis Were Subpoenaed
O’Leary had financial and promotional ties to FTX before the exchange collapsed. He was an investor in the company and served as a paid spokesperson. In December 2022, he disclosed that his promotional agreement with FTX was worth approximately $15 million.
O’Leary also said he had invested about $9.7 million in cryptocurrency and held more than $1 million in FTX equity, which he said became worthless after the company's bankruptcy.
Lewis became closely associated with FTX through his reporting on co-founder Sam Bankman-Fried. The author of “The Big Short” spent considerable time with Bankman-Fried while researching “Going Infinite: The Rise and Fall of a New Tycoon.” The book explored the former executive's business activities and personal life, drawing on access to him before FTX's collapse.
Published in October 2023, nearly a year after FTX filed for bankruptcy, the book and Lewis's accompanying interviews documented Bankman-Fried's rise and the events surrounding the exchange.
FTX Seeks to Recover $1.76 Billion From Binance
The lawsuit was filed in November 2024 and focuses on a share repurchase agreement reached in July 2021. The transaction involved Binance's holdings of a 20% stake in FTX's international business and an 18.4% stake in its U.S. parent company.
According to the plaintiffs, Alameda Research, the trading firm founded by Bankman-Fried, financed the buyback while FTX was already insolvent. The payments reportedly involved FTX's FTT token, Binance's BNB token and BUSD, a dollar-pegged stablecoin.
FTX's recovery entities characterize the transaction as a fraudulent transfer and are seeking to reclaim at least $1.76 billion. Binance and Zhao have disputed the allegations and asked the court to dismiss the claims.
The recovery effort is part of a broader set of legal actions pursued on behalf of FTX creditors. FTX Recovery Trust has also filed a separate $1.15 billion clawback lawsuit against Genesis Digital Assets and its affiliates, alleging that investments funded by Alameda involved misappropriated customer funds.
Court Allows Key Claims Against Binance and Zhao to Continue
Chief U.S. Bankruptcy Judge Karen B. Owens issued an opinion dated July 24 allowing the central recovery claims against Zhao and four Binance entities to proceed.
The judge dismissed fraudulent-transfer claims against former Binance executives Samuel Wenjun Lim and Dinghua Xiao. She also dismissed separate state-law claims brought against the Binance defendants.
However, the remaining allegations seeking repayment from Zhao and the four Binance entities survived the dismissal requests. The court's decision means the $1.76 billion recovery dispute remains unresolved.
A successful clawback would return the recovered assets to the plaintiffs for distribution through the FTX recovery process. The latest subpoenas seek additional records and information from individuals and organizations connected to FTX, its former leadership and the disputed transaction.
source: news.bitcoin
Writer: Ethan Collins
Crypto Journalist
Ethan Collins reports on developments across the cryptocurrency and blockchain sector. His work covers market movements, protocol updates, regulatory changes, and emerging trends in digital assets.
He focuses on presenting complex topics in a clear and accessible manner for a broad readership.
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