The FTX Recovery Trust Binance lawsuit just cleared a major procedural hurdle. A Delaware bankruptcy judge ruled that the trust’s core claims against Binance and co-founder Changpeng “CZ” Zhao can proceed to the next stage, keeping alive an attempt to claw back roughly $1.76 billion tied to a 2021 equity buyback. For traders, this matters less as legal trivia and more as a reminder that FTX’s collapse is still generating multi-billion-dollar shockwaves through the exchanges and executives who did business with it.
What Happened
The dispute goes back to July 2021, when FTX and its trading arm Alameda Research bought out Binance’s roughly 20% equity stake in FTX. Binance had been an early investor in the exchange, and the buyout let Sam Bankman-Fried’s companies fully separate from their former backer. FTX paid for that stake with a mix of its own FTT token, along with BNB and BUSD, rather than cash.
After FTX’s implosion in November 2022, the FTX Recovery Trust — the entity now managing the bankruptcy estate on behalf of creditors — sued Binance, several affiliated entities, and CZ personally in November 2024. The trust argues the 2021 payment amounted to a fraudulent transfer, alleging FTX and Alameda were already insolvent when they handed over the FTT, BNB, and BUSD, meaning Binance received value it should not have kept.
Binance and CZ moved to dismiss the case, with Zhao separately arguing that a US bankruptcy court has no jurisdiction over him given his residency outside the United States. In a recent opinion, the presiding judge rejected most of that motion, allowing five of the trust’s counts to move forward against the named Binance entities and against Zhao. Some claims tied directly to FTX’s broader collapse were dismissed, but the fraudulent-transfer theory tied to the buyback survived.
What It Means for Traders
It’s important to be precise here: nothing has been proven. Surviving a motion to dismiss only means the judge found the trust’s allegations plausible enough to warrant further litigation — not that Binance or CZ engaged in wrongdoing. The trust still has to build its case through discovery, survive summary judgment, and potentially win at trial before it can even attempt to collect a judgment of this size.
That said, traders watching Binance and BNB should treat this as a long-running overhang rather than a one-day headline. A $1.76 billion exposure, even as an unresolved allegation, is the kind of figure that can weigh on sentiment around Binance-linked assets each time a new filing or ruling drops. It’s a legal process measured in years, not weeks, and prior FTX-estate litigation has repeatedly shown that headline figures rarely match final recoveries.
It’s also worth remembering that this case is separate from the FTX estate’s creditor repayment program, which has already returned billions of dollars to creditors through a series of scheduled distributions. Any funds eventually recovered from Binance, if the trust prevails, would flow into that same creditor pool rather than create a new, separate payout.
The Bigger Picture
This case sits inside a much larger effort by the FTX estate to claw back funds wherever it believes value improperly left the company before it collapsed. The trust has pursued former executives, venture investors, and now one of the industry’s largest exchanges, arguing that insiders and counterparties benefited from transactions made while FTX was already in financial trouble. The estate has already distributed roughly 900 million dollars to creditors across dozens of countries in earlier rounds, alongside larger distributions since, showing the recovery effort is active on multiple fronts at once.
For Binance, the ruling extends a legal fight it clearly wanted resolved quickly. For CZ, it keeps him personally named in US litigation despite his argument that he shouldn’t be subject to a Delaware bankruptcy court’s authority. Neither outcome is decided, and appeals or renewed dismissal attempts on narrower grounds remain possible as the case moves into discovery.
Conclusion
The FTX Recovery Trust’s case against Binance and CZ is still in its early innings — a procedural win, not a verdict. But at $1.76 billion, it’s a large enough claim that traders should expect it to resurface repeatedly as filings, hearings, and rulings continue over the coming months.
This article is informational only and does not constitute financial advice.
