- FTX’s estate is suing Bybit and its investment arm Mirana, seeking to recover around $953 million in assets alleged to have been transferred fraudulently before FTX’s bankruptcy.
- The lawsuit alleges that Bybit was given VIP status on FTX and withdrew substantial funds in the days preceding FTX’s suspension of withdrawals.
In a significant development following the collapse of FTX, the estate of the bankrupt crypto firm has initiated legal action against Bybit, aiming to recover a substantial sum of $953 million. The lawsuit targets Bybit Fintech Ltd. and its investment arm, Mirana, along with several individuals, including executive Sean Tan.
The Legal Battle for Asset Recovery
The lawsuit, filed in Delaware, alleges that Mirana received digital assets currently valued at approximately $838 million from FTX.com, with about $500 million of these transfers occurring just before FTX halted withdrawals on November 8, 2022. Additionally, the lawsuit claims that a further $115 million in digital and fiat assets were transferred to entities and individuals linked to Bybit and Mirana. Most notably, over $61 million of these assets were withdrawn in the final days before FTX.com and FTX US disabled withdrawals.
Allegations of Preferential Treatment and Misconduct
The complaint put forth by the FTX estate suggests that Bybit was accorded VIP status on the FTX exchange. In the days leading up to the bankruptcy filing, Mirana and affiliates purportedly “raced to withdraw assets” from their FTX accounts. The complaint accuses Mirana of leveraging its VIP connections to expedite withdrawal requests, thereby reducing funds available for non-VIP customers of FTX.
Furthermore, the lawsuit alleges that FTX employees manipulated Mirana’s Know-Your-Customer (KYC) settings in the days preceding the withdrawals pause, implying potential internal collusion in facilitating these large asset transfers.
The Broader Context of FTX’s Bankruptcy
This legal action is part of broader efforts by FTX’s estate to recover misappropriated funds, including lawsuits against former executives and the parents of founder Sam Bankman-Fried. The new management of FTX’s estate and the U.S. government have accused the former management of misappropriating customer funds. Sam Bankman-Fried himself has been found guilty of fraud against FTX customers by a New York jury and is awaiting sentencing.
In conclusion, the lawsuit against Bybit and its affiliates marks a crucial step in the ongoing efforts of FTX’s estate to salvage assets following the firm’s dramatic collapse. As the legal proceedings unfold, they will likely shed further light on the events leading up to FTX’s bankruptcy and the role of various actors in the saga. CoinDesk has reached out to Bybit for comment on the ongoing lawsuit.