News

FTX Sues Bybit In Lawsuit Aiming To Recover $953 Million

Key Points:

FTX sues Bybit and initiates a $953 million legal action, alleging fund withdrawals before FTX’s Chapter 11 filing.
Bybit’s Mirana Corp. was accused of using exclusive “VIP” privileges to withdraw assets.
FTX actively works to restore assets, plan refunds for users, and transfer over $300 million for liquidation.

In a legal decision filed on Friday in a Delaware court, FTX sues Bybit as the cryptocurrency exchange’s bankruptcy advisers initiate a lawsuit against Bybit Fintech Ltd. and two corporate affiliates, including Mirana Corp., aiming to recover approximately $953 million in cash and digital assets.

FTX Sues Bybit Over Alleged Pre-Chapter 11 Fund Movements

According to Bloomberg, this significant legal action stems from allegations that funds were withdrawn from Sam Bankman-Fried‘s crypto exchange just before it entered Chapter 11 proceedings a year ago.

The lawsuit asserts that Bybit’s investment arm, Mirana Corp., benefited from exclusive “VIP” privileges, leveraging these special rights to withdraw the majority of its assets prior to FTX’s collapse in November 2022. Mirana is accused of pressing FTX employees to expedite its withdrawal requests, while ordinary customers face hours of delays as the exchange crumbles.

Bybit Fintech Ltd., Mirana, and affiliated crypto trading firm Time Research Ltd. are specifically named as defendants in the legal action. The complaint alleges that Mirana withdrew over $327 million from FTX between the early morning of November 7 and November 8, 2022, coinciding with Bankman-Fried’s exchange-halting withdrawals.

Asset Restoration and $300M Transfer Amidst Legal Proceedings

The FTX sues Bybit incident took place in its second year of bankruptcy proceedings, actively pursuing asset restoration to augment compensation for its customers. The exchange aims to refund up to 90% of the requested value to users, pending court approval before Q2/2024.

On November 11, 2023, FTX successfully transferred more than $300 million in assets to CEX exchanges for liquidation, following court approval for the sale of $3.4 billion in crypto in September.

DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

Harold

With a passion for untangling the complexities of the financial world, I've spent over four years in financial journalism, covering everything from traditional equities to the cutting edge of venture capital. "The financial markets are a fascinating puzzle," I often say, "and I love helping people make sense of them." That's what drives me to bring clear and insightful financial journalism to the readers of Coincu.