FTX agrees to $228m settlement in ByBit lawsuit

The FTX bankruptcy estate has agreed to a $228 million settlement with crypto exchange Bybit and its investment division Mirana, as part of its efforts to recover assets for its creditors.

According to an Oct. 24 filing, the FTX bankruptcy estate has agreed to settle its case against the Bybit exchange and will receive $175 million in digital assets, along with $53 million worth of BIT tokens as a part of the agreement.

FTX initially sought to recover roughly $1 billion from Bybit and its affiliate Mirana via the lawsuit initially filed in a Delaware court in November 2023.

FTX accused the companies of exploiting their “VIP” status to withdraw around $327 million right before FTX’s collapse in November 2022. FTX’s advisors claimed Mirana pressured FTX staff to expedite their withdrawal requests, bypassing the delays faced by regular users. 

The lawsuit also targeted individuals believed to have benefited from these transactions, including Singapore-based associates and a Mirana executive.

Attorneys for the FTX bankruptcy estate argued that Mirana and others were given priority withdrawal access, allegedly due to their close ties with FTX’s executives. They tracked these transactions in an internal database, showing how Mirana managed to withdraw large amounts even after FTX paused withdrawals for other users on Nov. 8, 2022.

Now, a hearing to finalize the settlement is scheduled for Nov. 20, 2024, and if approved, will allow FTX to reclaim $175 million in digital assets held on Bybit’s platform and sell around $52.7 million worth of BIT tokens to Mirana.

FTX’s legal representatives acknowledged that although their claims had merit, further litigation would be “time-consuming and expensive.” Settling the case allows FTX to recover some of the assets without further delay, the filing noted.

FTX saga nearing an end

The settlement follows the approval of FTX’s bankruptcy plan on Oct. 7, 2024, wherein the exchange’s debtors will repay 98% of users roughly 118% of their claims in cash.

Meanwhile, several top executives of the defunct crypto exchange have reached plea deals with federal prosecutors over the past months.

On September 24, received a reduced sentence of two years in prison by District Judge Lewis A. Kaplan due to her cooperation with authorities which is believed to have played a key role in unveiling the FTX debacle.

CEO of FTX digital markets Ryan Salame, was sentenced to 7.5 years in May, while the exchange’s former head of engineering Nishad Singh has asked the court to exempt him from a prison sentence.