FTX has announced the settlement of its lawsuit against cryptocurrency exchange Bybit, which will allow it to recover $228 million. This development aids in recuperating part of the assets lost in the 2022 crypto crash, helping to repay former customers and creditors.
From $953 Million to $228 Million
The initial lawsuit filed in late 2023 sought to recover approximately $953 million from Bybit. FTX accused Bybit’s investment arm, Mirana, of receiving preferential treatment, which allowed it to withdraw nearly $500 million before FTX halted withdrawals. The dispute escalated as FTX claimed Bybit restricted its access to recover assets held on its platform, effectively holding them 'hostage.' Although the final settlement amount falls short of the initial claim, it represents a win for FTX's bankruptcy estate.
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, which has been approved by the District of Delaware Bankruptcy Court.
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Genesis amounted to $3.88 billion, covering loan repayments made by its hedge fund arm, Alameda Research, and assets withdrawn by Genesis from FTX before its collapse. Bybit's settlement with FTX also serves as a strategic move for the company, which can focus on recovery while coping with legal uncertainties.
The settlement between FTX and Bybit marks a significant step in FTX's bankruptcy process, providing a means to recoup losses from the 2022 crypto crash. This resolution will aid the company in restoring its financial stability and addressing its obligations to customers and creditors.
