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 pay creditors.

This recovered amount is expected to help the bankrupt exchange pay its creditors.

FTX-Bybit: Close on sight

The settlement, described in an Oct. 24 court filing, closes a 2023 lawsuit brought by FTX’s estate, which aimed to recover assets for former customers and creditors of the bankrupt exchange.

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

FTX’s ownership also said the deal is “in the best interests” of all parties and argued it provides a safer outcome than continuing with litigation, which could drain resources needed for creditor payments. FTX also requested a waiver of the usual 14-day waiting period for asset distributions to expedite the process.

A court hearing scheduled for 2:00 PM ET on November 20, 2024 will determine the fate of the settlement.

FTX Bankruptcy: Almost Two Years Later

FTX declared bankruptcy at the end of 2022 after its collapse. As part of its strategy to recover assets, the bankruptcy estate filed multiple lawsuits.

This particular one came up exactly one 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 hundreds of millions worth of cash and assets, even after the crypto exchange paused withdrawals by others users It also claimed that Bybit retained real 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 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 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 industry’s largest US regulatory enforcement actions, racking up a staggering $12.7 billion in total settlement fees. According to CoinGecko, this amount is considered the highest penalty ever imposed on crypto companies.

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