FTX Settles Legal Dispute with Bybit for $228 Million.
FTX has reached a $228 million settlement with Bybit and its investment branch, Mirana, allowing it to reclaim vital assets for its creditors. This settlement is particularly crucial as it includes approximately $175 million in digital assets and $53 million in BIT tokens, pending court approval.
FTX has announced a preliminary settlement of $228 million with the cryptocurrency exchange Bybit, and its affiliates for approximately $228 million. This landmark agreement allows FTX to reclaim assets from Bybit’s cryptocurrency exchange, marking a pivotal moment in the ongoing efforts to recover funds for creditors.
FTX submitted a formal request to the U.S. Bankruptcy Court for the District of Delaware, seeking approval for the settlement reached after months of negotiations. Under the terms of the deal, FTX’s liquidating estate will regain about $175 million in digital assets currently held on Bybit’s platform. Additionally, FTX plans to sell BIT tokens to Bybit’s investment branch, Mirana Corp., for around $53 million.
The lawsuit, initiated by FTX last year, alleged that Mirana exploited special privileges to withdraw $327 million in assets from the now-defunct platform just before its collapse in November 2022. Other users faced considerable challenges accessing their funds during this critical period, leading to widespread frustration and distrust.
As part of the settlement agreement, defendants who withdrew funds shortly before the bankruptcy filing will be eligible for creditor claims amounting to 75% of their total account balances as of the bankruptcy filing date. FTX highlighted that this arrangement would lead to significant savings for the debtors’ estates.
“Through the Settlement Agreement, the Debtors will be able to recover nearly everything they aim to reclaim,” the company stated. “This agreement also enables the Debtors to secure this substantial recovery for their stakeholders while sidestepping the costs, uncertainties, and challenges of ongoing litigation and any potential risks tied to enforcing a judgment internationally.”
This settlement is part of a broader strategy initiated by CEO John J. Ray III, who took the helm of FTX and its associated entities following the exchange’s bankruptcy two years ago. Earlier this month, FTX received court approval to implement a wind-down plan aimed at distributing at least $12.6 billion to customers whose digital assets have been locked on the platform.
FTX was a centralized cryptocurrency exchange that sought bankruptcy protection in the U.S. The company went bankrupt in November 2022 after its founder and former CEO, Sam Bankman-Fried, was charged and convicted of stealing customer deposits and defrauding investors. The current CEO of FTX is John J. Ray III, an expert in recovering assets from distressed corporations.
Related: FTX investors halt lawsuit against law firm Sullivan & Cromwell