The FTX bankruptcy estate has reached a $228 million settlement with cryptocurrency exchange Bybit and its investment division Mirana. This settlement is part of FTX’s ongoing efforts to recover assets for its creditors.

Settlement Details

According to an Oct. 24 filing, the FTX bankruptcy estate will receive $175 million in digital assets and $53 million worth of BIT tokens from Bybit. This agreement is a significant step in FTX’s asset recovery process.

Background of the Lawsuit

Originally, FTX aimed to recover approximately $1 billion from Bybit and its affiliate Mirana through a lawsuit filed in a Delaware court in November 2023. FTX accused these entities of exploiting their “VIP” status to withdraw around $327 million just before FTX’s collapse in November 2022.

FTX’s advisors argued that 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.

Priority Withdrawals

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

Upcoming Hearing

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

FTX’s legal representatives noted 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.

Recent Developments

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

Additionally, several top executives of the defunct crypto exchange have reached plea deals with federal prosecutors over the past months. On September 24, an executive received a reduced sentence of two years in prison by District Judge Lewis A. Kaplan. This cooperation is believed to have played a key role in uncovering the FTX debacle.

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

#CryptoAdoption #CryptoCommunity

Post Views: 1