After a year of legal battles, FTX has reached an agreement with the cryptocurrency exchange Bybit for an amount of $228 million. This agreement helps FTX recover some of the assets lost during the crypto crash of 2022, providing funds for former customers and creditors.
From $953 Million to $228 Million
The original lawsuit initiated in late 2023 sought to reclaim approximately $953 million from Bybit. FTX accused Bybit’s investment arm, Mirana, of receiving preferential treatment, allowing it to withdraw nearly $500 million before FTX halted withdrawals. The lawsuit detailed how Mirana was able to withdraw approximately $327 million during a critical period, reducing available funds for FTX’s other customers. FTX also argued that Bybit restricted access to recover assets, effectively keeping them 'hostage.' Although the final settlement amount falls short of the initial claim, it represents a victory for FTX’s bankruptcy estate. In court filings, FTX emphasized that this arrangement brings 'significant net savings for the debtors’ estates.'
Implications of the Settlement
The settlement allows FTX’s liquidation estate to reclaim $175 million in cryptocurrencies from Bybit accounts. As part of the agreement, FTX plans to sell over 105 million BIT tokens held by Mirana, valued at around $52.7 million. Additionally, customers who withdrew funds from FTX before its bankruptcy will still be eligible to claim 75% of their aggregate balance as of the petition date. FTX’s bankruptcy expert, John J. Ray III, noted that over 94% of creditors have voted in favor of the company’s reorganization plan. The District of Delaware Bankruptcy Court approved this plan, which aims to repay 98% of creditors at least 118% of their claim value in cash.
Legal Complexities
In parallel court proceedings, FTX’s legal team highlighted that this settlement paves the way for the confirmation of Genesis’s chapter 11 reorganization plan. FTX’s original claims against Genesis amounted to $3.88 billion. Bybit's settlement with FTX also serves as a strategic move for the company, which can focus on recovery while coping with legal uncertainties. Ray remarked that the deal was fair and in FTX’s best interests, given the ongoing legal challenges.
The settlement between FTX and Bybit marks an important step towards recovering financial assets and fulfilling obligations to creditors and customers within the bankruptcy proceedings.
