FTX sues crypto firm Bybit to recover assets worth US$953 million
FTX’S bankruptcy advisers sued crypto exchange Bybit Fintech and two corporate affiliates to recover cash and digital assets valued at roughly US$953 million that was withdrawn from Sam Bankman-Fried’s crypto exchange before it filed Chapter 11 a year ago.
The lawsuit filed on Friday (Nov 10) in Delaware court alleges Bybit’s investment arm, Mirana, had special “VIP” benefits, which most FTX customers did not have, and used those special privileges to get most of its assets off Bankman-Fried’s platform before it collapsed in November 2022.
Mirana pressured FTX employees to fulfil its withdraw requests as regular customers of FTX.com waited hours trying to get money off the exchange as it collapsed, according to the complaint. The lawsuit seeks to recover assets worth roughly US$953 million, a figure that includes more than US$327 million Mirana allegedly withdrew from FTX between the early morning of Nov 7 and Nov 8 2022, when Bankman-Fried’s exchange paused withdraws.
Representatives for Bybit did not immediately respond to a message seeking comment on the complaint. An FTX spokesperson declined to comment.
The bankruptcy lawsuit names Bybit Fintech, Mirana and an affiliated crypto trading firm named Time Research. The lawsuit also lists as defendants a senior Mirana executive at the time and Singaporean residents whom the complaint alleges either benefited or had a role in the FTX withdraws, which are subject to the bankruptcy suit.
Chapter 11, in general, gives failed companies the ability to recover funds in the months before a bankruptcy filing a power meant to make sure certain creditors don’t get a windfall just because they were able to get their money out of a failed business while others could not. The Bybit complaint is the latest lawsuit brought by FTX’s new management seeking to recover funds paid out before it filed Chapter 11 last November.
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FTX said in the lawsuit that it valued the assets Bybit and its affiliates withdrew from its exchange using Nov 1 pricing and that it could supplement pricing information as the litigation moves forward. The complaint also said that at least some of its legal claims may be subject to so-called “subsequent new value” defences. BLOOMBERG
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