FTX agrees to $228m settlement in ByBit lawsuit

FTX bankruptcy estate reached a $228 million settlement with crypto exchange Bybit and its investment division Mirana as part of its creditors’ efforts to recover assets.

According to the filing filed on October 24, the FTX bankruptcy estate has agreed to settle its case against the Bybit exchange and will receive $175 million worth of digital assets as well as $53 million worth of BIT tokens as part of the settlement.

FTX initially sought to recover nearly $1 billion from Bybit and its subsidiary Mirana through a lawsuit filed in Delaware court in November 2023.

FTX accused the companies of exploiting their “VIP” status to siphon off approximately $327 million just before FTX’s November 2022 collapse. FTX advisors alleged that Mirana pressured FTX staff to expedite withdrawal requests, bypassing delays faced by regular users.

The case also targeted individuals believed to have benefited from these transactions, including Singapore-based partners and a Mirana executive.

Lawyers for the FTX bankruptcy estate argued that Mirana and others were given priority withdrawal access, allegedly because of their close ties to FTX executives. They tracked these transactions in an internal database and showed how Mirana managed to withdraw large amounts of funds even after FTX paused withdrawals for other users on November 8, 2022.

Now, a hearing to finalize the deal is scheduled for November 20, 2024, and if approved, it will allow FTX to buy back $175 million in digital assets held on the Bybit platform and sell approximately $52.7 million worth of BIT tokens to Mirana.

FTX’s legal representatives acknowledged that although its claims had merit, further litigation would be “time-consuming and expensive.” Resolving the case allows FTX to recover some of the assets without further delay, the filing said.

The FTX saga is nearing its end

The deal follows the approval of FTX’s bankruptcy plan on October 7, 2024; the exchange’s borrowers will repay approximately 118% of their demands in cash to 98% of users.

Meanwhile, several top executives of the defunct crypto exchange have struck plea deals with federal prosecutors in recent months.

On September 24, his two-year prison sentence was commuted by District Judge Lewis A. Kaplan for his cooperation with authorities, who is believed to have played a key role in uncovering the FTX debacle.

Ryan Salame, CEO of FTX digital markets, was sentenced to 7.5 years in prison in May, while the exchange’s former head of engineering Nishad Singh asked the court to spare him from prison time.