FTX Settles Multimillion Lawsuit With Bybit as Bankruptcy Proceedings Advance

In a recent development, the bankruptcy estate of FTX has reached a $228 million settlement with the Bybit exchange, as detailed in an October 24 legal filing.

This lawsuit, initiated in 2023, aimed to recover funds for repaying former customers and creditors of FTX.

Under the terms of the settlement, FTX will retrieve $175 million in digital assets from Bybit and sell around $53 million in BIT tokens to Mirana Corp, an investment arm of the exchange. FTX’s legal representatives acknowledged the validity of their claims but pointed out that further litigation would be challenging, time-consuming, and costly.

This agreement awaits court approval, with a hearing set for November 20, 2024, to finalize the terms between FTX and Bybit. The legal action stemmed from FTX’s initial $1 billion lawsuit filed in November 2023, which accused Bybit and Mirana of exploiting their “VIP” access to withdraw approximately $327 million in digital assets right before FTX’s collapse.

Allegations claimed that Mirana and others had preferential withdrawal rights granted by FTX executives during the company’s crisis, which were documented in an internal database.

This lawsuit is just one of several challenges the FTX estate has faced during its protracted bankruptcy process. Following the recent approval of FTX’s reorganization plan on October 7, 2024, by Judge John Dorsey, investors dropped their lawsuit against Sullivan & Cromwell, the legal firm that previously represented FTX, amid accusations that the firm had knowledge of the fraud and benefited from its association with the company.