The FTX estate has finally reached a tentative $228 million settlement with the cryptocurrency exchange Bybit, according to an Oct. 24 court filing.
This settlement stems from a lawsuit initially filed by the FTX estate in 2023, which sought to reclaim funds in a bid to reimburse former FTX customers and creditors.
The agreed terms, pending court approval, allow FTX to withdraw $175 million in digital assets currently held on Bybit. Additionally, the estate will sell approximately $53 million in BIT tokens to Mirana Corp., an investment division affiliated with Bybit.
Despite FTX’s confidence in the merits of its claims, attorneys acknowledged that prolonged litigation would be costly and complex. “Plaintiffs’ claims for turnover, violations of the automatic stay, and fraudulent and preferential transfers are disputed, carry some degree of risk, and in any event would be time-consuming and expensive to further litigate,” stated the legal representatives.
A court hearing scheduled for Nov. 20, 2024, at 2 PM Eastern time, will determine whether the settlement is finalized, marking another chapter in the FTX estate’s lengthy legal journey.
It is worth noting that the lawsuit against Bybit is one of numerous actions taken by the FTX bankruptcy estate in an attempt to recoup assets lost in the exchange’s collapse. The FTX estate initially filed a $1 billion lawsuit against Bybit and Mirana in November 2023.
The lawsuit alleged that Bybit, leveraging a “VIP” relationship with FTX executives, withdrew approximately $327 million in digital assets and cash ahead of the company’s downfall. In fact, attorneys claimed these entities were granted priority access to withdrawals, which were reportedly documented in FTX’s internal databases, according to Cointelegraph.
This settlement with Bybit reflects FTX’s broader efforts to streamline its bankruptcy resolution and repay creditors. On Oct. 7, 2024, Judge John Dorsey approved FTX’s reorganization plan, which also led to the voluntary dismissal of a separate lawsuit brought by FTX investors against the law firm Sullivan & Cromwell.
Creditors had alleged that the firm was complicit in FTX’s fraudulent activities during its period of legal representation.
