FTX, a cryptocurrency exchange that filed for Chapter 11 bankruptcy, has filed a lawsuit against Bybit Fintech and its affiliated companies in an attempt to recover approximately $953 million in cash and digital assets. The lawsuit alleges that Bybit’s investment arm, Mirana Corp., enjoyed special benefits not available to most FTX customers, allowing them to withdraw a significant portion of their assets just before FTX’s collapse in November 2022.
The Allegations
The lawsuit, filed in a Delaware court, claims that Mirana exerted pressure on FTX employees to fulfill its withdrawal requests, while regular customers faced delays in accessing their funds. The lawsuit seeks to recover assets totaling around $953 million, with more than $327 million allegedly withdrawn by Mirana between November 7 and November 8, 2022, when FTX paused withdrawals. Bybit Fintech Ltd., Mirana, and affiliated company Time Research Ltd. are named as defendants in the bankruptcy lawsuit.
Chapter 11 Bankruptcy Proceeding
In Chapter 11 bankruptcy, failed companies have an opportunity to recover funds in the months leading up to the filing. This provision prevents certain creditors from unfairly benefiting by withdrawing their funds while others cannot. FTX determined the value of the assets withdrawn by Bybit and its affiliates using November 1 pricing, with the possibility of updating pricing information as the litigation progresses. The complaint also acknowledges that some legal claims may be subject to “subsequent new value” defenses.
This lawsuit against Bybit is the latest in a series of legal actions taken by FTX’s new management to reclaim funds disbursed prior to their Chapter 11 filing. The company has also initiated legal action against Kives and his venture capital firm, K5, to recover the estimated $700 million that Bankman-Fried had invested in it. Additionally, FTX is trying to recover funds donated to politicians and charitable organizations, including the Metropolitan Museum of Art. The company’s advisers are further investigating the possibility of reclaiming money paid to celebrities, such as Shaquille O’Neal and Naomi Osaka, for their endorsements of the platform.
