Crypto exchange FTX’s bankruptcy advisers filed a lawsuit against Bybit Fintech Ltd. to reclaim cash and digital assets valued at an astounding $953 million.
According to the counsel, ByBit allegedly withdrew all of the funds shortly before FTX filed for Chapter 11 bankruptcy in November. The action, submitted on Friday, November 10, to a Delaware court, claims that Mirana Corp., Bybit’s investment arm, was granted special “VIP” privileges that are not extended to most FTX clients.
Before the platform’s collapse in November 2022, Mirana is said to have moved most of its assets off FTX by taking advantage of these rights. According to the complaint, normal FTX clients experienced delays while Mirana pressured FTX workers to speed withdrawal requests.
The lawsuit seeks to reclaim assets worth about $953 million, including more than $327 million that Mirana is said to have taken out when FTX stopped accepting withdrawals on November 8, 2022.
Bybit Fintech Ltd., Mirana, and a connected cryptocurrency trading company named Time Research Ltd. are named in the bankruptcy complaint. According to the complaint, a top Mirana official from that era and Singaporean citizens who either benefited from or had a part in the FTX withdrawals that are being investigated in the bankruptcy case are also named as defendants in the action.
Generally speaking, Chapter 11 gives financially troubled businesses the chance to recover assets in the months before declaring bankruptcy. This power keeps certain creditors from benefiting unfairly just because they could take their money out of a failing company while other creditors could not.
Bybit’s lawsuit is the latest action FTX’s new management took to recover money that was disbursed before the firm filed for Chapter 11 in November 2022.
FTX claimed in the lawsuit that it evaluated the assets that Bybit and its affiliates removed from its exchange using pricing effective on November 1st. FTX further stated that if the legal actions continue, it may improve price information.
The complaint further stated that it may face defenses relating to “subsequent new value” in relation to several of its legal claims. The ex-president of NYSE is very interested in restarting the crypto exchange, FTX, which is now working towards that goal.
The exchange may have significant financial support to relaunch itself if it successfully recovers ByBit funds. In addition, the exchange has been raising money by selling its Solana tokens.
