FTX Bankruptcy Estate Sues Bybit to Recoup $953 Million

Table of Contents

• Bybit Received Massive Transfers Just Days Before FTX Halted Withdrawals
• Sam Bankman-Fried Found Guilty on All Charges

The bankruptcy estate of failed crypto exchange FTX filed a lawsuit against Bybit, its investment arm, Mirana, and several executives to recover $953 million Bybit withdrew from FTX just before its collapse. 

According to reports by Bloomberg, FTX’s bankruptcy estate, headed by CEO John J. Ray, filed a lawsuit against crypto exchange Bybit and two of its corporate affiliates to recoup cash and asset valued at around $953 million that was withdrawn from FTX before it filed for Chapter 11 bankruptcy. 

Bybit Received Massive Transfers Just Days Before FTX Halted Withdrawals

The legal complaint filed in Delaware is aimed at Bybit Fintech Ltd., its investment arm, Mirana, and several executives. The suit claims that Mirana “received gross transfers from FTX.com of digital assets currently valued at approximately $838 million.” The filing explains that about $500 million of the funds mentioned above were transferred in the days before FTX halted its customer withdrawals on November 8, 2022. According to the lawsuit, an additional $115 million in digital and fiat assets were transferred to entities and individuals associated with Bybit and its investment arm, Mirana. 

The filing states:

“As with Mirana, the majority of these assets – more than $61 million – were withdrawn in the final days before FTX.com and FTX US disabled withdrawals.”

According to the FTX bankruptcy estate, Bybit received “VIP” status on its platform. In the days prior to the exchange’s Chapter 11 filing, Mirana and its associates “raced to withdraw assets” from their account. 

FTX alleges:

“Mirana leveraged its VIP connections to pressure FTX Group employees to fulfill its withdrawal requests as soon as assets became available, further reducing the funds available to meet withdrawal requests by FTX.com’s non-VIP customers.”

FTX’s action wants Bybit to return the “preferentially” or “fraudulently” transfers of the asset.  

The claim further states that Bybit imposed limitations on the FTX estate preventing it from withdrawing assets exceeding $125 million on the exchange. Allegations suggest Bybit is using the assets as leverage to recover its remaining balance of $20 million that it could not withdraw from FTX before the chaos ensued. 

Sam Bankman-Fried Found Guilty on All Charges

FTX’s former CEO, Sam Bankman-Fried (SBF), was recently found guilty on all charges, including wire fraud, securities fraud, and conspiracy to commit wire fraud. During the criminal trial against SBF, several witnesses, including Caroline Ellison and Gary Wang, gave testimony that implicated SBF in the spectacular collapse of FTX. SBF will receive his sentence on March 28, 2024, and is expected to receive imprisonment between 5 and 20 years. 

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.