After a year of legal battles, FTX has reached a settlement with crypto exchange Bybit, recovering $228 million from an initially claimed $953 million.

From $953 Million to $228 Million

The original lawsuit was filed in late 2023, seeking to reclaim approximately $953 million from Bybit. FTX accused Bybit's investment arm, Mirana, of receiving preferential treatment, which allowed it to withdraw nearly $500 million just before FTX halted operations. These actions allegedly decreased available funds for FTX's other customers. Despite the final settlement amount being less than 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. 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 are still eligible to claim 75% of their aggregate balance as of the petition date. Over 94% of creditors approved the reorganization plan in the District of Delaware Bankruptcy Court.

Legal Complexities

Parallel court proceedings 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against Genesis amounted to $3.88 billion, covering loan repayments by its hedge fund arm, Alameda Research, and assets withdrawn by Genesis from FTX before its collapse. Bybit's settlement with FTX is also a strategic move for the company, allowing it to focus on recovery.

The settlement with Bybit marks a significant step towards returning funds to creditors and customers after the market collapse. This process has enabled FTX to significantly reduce uncertainties and costs associated with prolonged litigation.