FTX has agreed to settle its lawsuit against Bybit, its executives, and investment arm Mirana, securing an expected $228 million to aid in repaying creditors.
This recovered amount is expected to help the bankrupt exchange repay its creditors.
FTX-Bybit: Closure in Sight
The deal, outlined in an Oct. 24 court filing, brings closure to a 2023 lawsuit initiated by the FTX estate, which aimed to recover assets for former customers and creditors of the bankrupt exchange.
The settlement, pending court approval, specifies that FTX will retrieve $175 million in digital assets currently held on Bybit’s platform and sell $52.7 million in BIT tokens to Mirana Corp., which happens to be the exchange’s affiliated investment entity.
The FTX estate also said that this agreement is in the “best interests” of all parties and argued that it provides a more certain outcome than continuing with litigation, which could drain resources needed for creditor payouts. FTX also requested a waiver of the usual 14-day waiting period for asset distribution to speed up the process.
A court hearing scheduled for 2 PM Eastern Time on November 20, 2024, will determine the fate of the settlement.
FTX Bankruptcy: Almost Two Years Later
FTX filed for bankruptcy in late 2022 following its collapse. As part of its strategy to recover assets, the bankruptcy estate filed multiple lawsuits.
This particular one was filed exactly a year after the crypto exchange went under and sought $1 billion from Bybit and Mirana. The estate alleged that Bybit used its “VIP” access to FTX to withdraw cash and assets worth hundreds of millions even after the crypto exchange paused withdrawals for other users. It also claimed that Bybit withheld estate assets on its platform, effectively holding them “hostage.”
This settlement comes after the approval of FTX’s bankruptcy plan on October 7, which confirmed that the exchange’s debtors will reimburse 98% of users with approximately 118% of their claims in cash. FTX projected a total recovery of between $14.7 billion and $16.5 billion, largely due to assets recovered from a range of entities, including the US Department of Justice and foreign regulators.
The collapse of FTX triggered a series of lawsuits and settlements. FTX and its sister company, Alameda, were at the center of the largest regulatory enforcement actions by US authorities in the industry, amassing an astonishing $12.7 billion in total settlement fees. According to CoinGecko, this amount ranks as the highest penalty ever imposed on crypto firms.
