FTX has settled its lawsuit with crypto exchange Bybit for $228 million after a lengthy legal battle. This settlement helps recover a portion of assets lost during the 2022 crypto crash and provides funds to repay former customers and creditors.
From $953 Million to $228 Million
The original lawsuit, initiated in late 2023, aimed 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. This allegedly reduced available funds for FTX's other customers. FTX also claimed Bybit restricted its access to assets held on Bybit's platform. Although the final settlement amount is less than the initial claim, it represents a victory for FTX's bankruptcy estate.
Implications of the Settlement
The settlement allows FTX 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 $52.7 million. 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
Parallel court proceedings have paved 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 is also a strategic move for both companies, allowing them to focus on recovery while addressing legal complexities.
The settlement with Bybit marks a significant step for FTX, enabling it to recover lost funds and continue restructuring and repaying creditors. This agreement highlights the importance of dispute resolution in the cryptocurrency sector amid complex legal environments.
