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The FTX estate reached a $228 million settlement agreement with Bybit, a crypto exchange, following a lengthy legal battle that started in 2023. The lawsuit, filed by the FTX estate, aimed to recover funds that could be redirected to former customers and creditors impacted by FTX’s collapse.
According to court documents filed on October 24, the agreement allows FTX to reclaim $175 million in digital assets held by Bybit. Additionally, Bybit’s investment division, Mirana Corp, will purchase $53 million in BIT tokens, giving the estate further assets to redistribute to its creditors.
Despite attorneys for FTX expressing confidence in their claims, they acknowledged that further litigation would be both costly and time-consuming. “Plaintiffs’ claims for turnover, violations of the automatic stay, and fraudulent and preferential transfers are disputed,” stated FTX’s legal team, highlighting the challenges and uncertainties associated with prolonged legal proceedings.
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FTX vs. Bybit
The FTX estate’s legal action against Bybit and Mirana stems from allegations that, during FTX’s last days, Mirana used its “VIP” status to withdraw approximately $327 million in cash and digital assets just before FTX collapsed. According to FTX’s legal filings, these withdrawals were facilitated by priority access granted by former FTX executives and were recorded in a special database.
This lawsuit is one of many that the FTX estate has tackled in its efforts to recover assets and stabilize its bankruptcy proceedings. Although FTX sought an initial $1 billion in damages from Bybit and Mirana, the settlement amount signals a compromise aimed at achieving a faster resolution. The court has scheduled a hearing on November 20, 2024, to formally approve this settlement, marking the next critical step for both parties.
Aftermath of FTX Reorganization Plan Approval
Earlier in October, U.S. Bankruptcy Judge John Dorsey approved FTX’s reorganization plan, a step that some say signals a positive shift in the firm’s complex bankruptcy case. Following the approval, FTX investors dropped their lawsuit against Sullivan & Cromwell, a law firm once linked to FTX deals. Alleging that Sullivan & Cromwell profited while possibly knowing of internal misconduct, the investors have since ceased legal action, allowing the FTX estate to focus on its path toward repayment and financial recovery.
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As FTX progresses through its remaining hurdles, this Bybit settlement could serve as a key achievement in its broader effort to compensate those affected by one of the largest crypto collapses in recent memory.
