FTX Agrees to $228 Million Settlement in Bybit Legal Dispute

FTX has agreed to settle its lawsuit against Bybit, its executives and investment arm Mirana, securing an expected $228 million to help repay creditors.

This recovered amount should help the bankrupt exchange repay its creditors.

FTX-Bybit: closing in sight

The deal, outlined in an Oct. 24 court filing, ends a 2023 lawsuit filed by the FTX estate that sought to recover assets from the bankrupt exchange’s former customers and creditors.

The settlement, pending court approval, specifies that FTX will recoup $175 million in digital assets currently held on the Bybit platform and sell $52.7 million in BIT tokens to Mirana Corp., which happens to be the investment entity affiliated with the stock exchange.

The FTX estate also said the deal was in the “best interests” of all parties and argued it offered a more certain outcome than continuing litigation, which could drain resources needed for payment. creditors. FTX also requested a waiver from the usual 14-day waiting period for asset distribution to speed up the process.

A court hearing scheduled for 2 p.m. Eastern Time on November 20, 2024 will determine the fate of the settlement.

FTX bankruptcy: almost two years later

FTX filed for bankruptcy at the end of 2022 following its collapse. As part of its asset recovery strategy, the bankruptcy estate filed several lawsuits.

This was filed exactly a year after the crypto exchange collapsed 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 suspended withdrawals for other users. He also claimed that Bybit had withheld real estate assets on its platform, thereby holding them “hostage”.

This settlement comes after the approval of FTX’s bankruptcy plan on October 7, which confirmed that the exchange’s debtors would repay 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 various entities, including the U.S. Department of Justice and foreign regulators.

The collapse of FTX sparked a series of lawsuits and settlements. FTX and its sister company, Alameda, have been at the center of the largest regulatory enforcement actions by U.S. authorities in the industry, amassing a combined $12.7 billion in settlement fees. According to CoinGecko, this amount constitutes the highest penalty ever imposed on crypto companies.