FTX plaintiffs use Eleventh Circuit ruling to fight arbitration push

Plaintiffs in the FTX multi-district litigation filed a Notice of Supplemental Authority on August 21, 2026, pushing back against the promoter defendants’ bid to move everything into private arbitration. The filing centers on a single Eleventh Circuit order issued two days earlier — In re Martin, No. 26-11695 — which came out of similar claims against Binance and its former CEO Changpeng Zhao.

Plaintiffs’ counsel Adam Moskowitz and David Boies argue the ruling “squarely supports Plaintiffs’ argument that equitable estoppel cannot compel arbitration because their statutory securities claims do not depend upon the FTX Terms.” What the Eleventh Circuit actually held in the Binance dispute: courts cannot force arbitration when claims rest on “independently imposed federal and state-law duties,” even where the underlying facts overlap with a user contract. The court found a “clear and indisputable” right to relief. Equitable estoppel, it held, cannot “alter and expand an arbitration clause that would not otherwise cover the claims asserted.”

That holding matters specifically here because these plaintiffs aren’t just alleging fraud. They’re pursuing RICO violations and state consumer protection claims. The In re Martin plaintiffs alleged that Binance allegedly operated as an unlicensed money-transfer business without complying with the Bank Secrecy Act and state statutes. Those duties exist regardless of whether a user ever clicked through a sign-up screen — the FTX Terms of Service don’t create them, and the Eleventh Circuit held that equitable estoppel cannot alter or expand an arbitration clause to cover claims it otherwise would not cover. The FTX plaintiffs are now asking the district court to treat that logic as transferable to their own statutory claims.

The SEC announced charges against former executives at Tricolor Holdings, LLC over a scheme involving double-pledged subprime auto loans. Tricolor had raised more than $1.9 billion through asset-backed securities offerings before filing for bankruptcy in September 2025, with more than $945 million of that principal — $945 million out of $1.9 billion raised, or approximately 49.7% — still outstanding and payable to investors at that point. David Woodcock, Director of the SEC’s Division of Enforcement, said the agency alleges “that these defendants defrauded investors based on bogus collateral and violated the integrity of our private credit markets.” The SEC action does not bear directly on the arbitration question before the MDL court.

Whether In re Martin actually moves anything in the FTX litigation depends on how the district court applies this supplemental authority to the pending motions. No ruling date or outcome was available at publication. If the district court adopts the reasoning, the promoter defendants would face the relevant claims in court; if not, those disputes could proceed in arbitration.