FTX Shakes Hands on a $228M Settlement with ByBit

In a 24 October legal filing, the FTX bankruptcy estate announced a $228 million settlement with Bybit, marking progress in its efforts to recover assets to repay former customers and creditors.

The agreement permits FTX to withdraw $175 million in digital assets held by Bybit and to sell roughly $53 million in BIT tokens to Bybit's investment arm, Mirana Corp.

FTX attorneys emphasized that, while the case had merit, further litigation would be burdensome:

"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."

The settlement awaits court approval, with a hearing scheduled for 20 November 2024, at 2 PM Eastern.

FTX Initially Filed a $1B Lawsuit Against ByBit

In November 2023, FTX filed a $1 billion lawsuit against Bybit and its investment arm, Mirana, alleging they exploited "VIP" access and close ties with FTX executives to withdraw approximately $327 million in digital assets and cash just before FTX's collapse, effectively sidelining other customers from accessing funds.

FTX's legal team contended that Mirana and select others were granted priority withdrawal privileges by FTX insiders, with these transactions documented in an internal database.

FTX stated:

“Through the Settlement Agreement, the Debtors will be recovering substantially everything that they seek to recover.”

Will FTX Be Able to Repay its Customers With No Confirmation on Repayment Date?

The lawsuit against Bybit is one of many legal challenges faced by the FTX estate during its prolonged bankruptcy proceedings.

On 7 October 2024, Judge John Dorsey approved FTX's reorganisation plan, prompting FTX investors to voluntarily dismiss their lawsuit against Sullivan & Cromwell, the law firm that had represented FTX in various deals.