- FTX has secured a $288 million settlement from ByBit in its ongoing bankruptcy litigation
- The funds are part of FTX’s efforts to recover assets allegedly withdrawn unfairly by ByBit before FTX’s 2022 collapse
- This settlement marks a significant step in FTX’s ongoing process to reimburse creditors affected by its bankruptcy
Defuncy exchange FTX has reached a $288 million settlement with crypto exchange ByBit, bringing the liquidation process close to its conclusion. The settlement, part of FTX’s broader asset recovery strategy, aims to resolve a portion of the nearly $1 billion in funds that FTX’s bankruptcy team claims ByBit withdrew under special privileges before FTX’s collapse. ByBit has yet to publicly respond to the settlement, which follows a string of legal actions as FTX seeks to restore financial stability for its creditors.
ByBit Removed Fund Prior to Bankruptcy
FTX’s bankruptcy estate filed suit against ByBit in November 2023, alleging that ByBit and its investment arm, Mirana Corp., leveraged VIP privileges to expedite large asset withdrawals as FTX faced a liquidity crisis. ByBit’s actions allegedly included securing preferential treatment over other clients, allowing it to withdraw nearly $953 million from FTX right before the latter declared bankruptcy. Among these withdrawals, FTX claimed, Mirana managed to take out over $327 million in two days amid the platform’s financial collapse.
A year of negotiations has led to a $288 million settlement between the two companies and is seen as a substantial, though partial, victory in FTX’s recovery efforts. John J. Ray III, the CEO leading FTX’s restructuring, has been pursuing these assets under the Chapter 11 process, which mandates a fair distribution of assets among all creditors.
Future Implications
The settlement sets a precedent for FTX’s other lawsuits against entities accused of exploiting FTX’s collapse. In its effort to recover assets lost before declaring bankruptcy, FTX has filed lawsuits against K5 Global, a venture capital firm linked to high-profile investors and political figures, and Genesis.
FTX’s lawsuits have also targeted its former executives, including founder Sam Bankman-Fried, Caroline Ellison (former Alameda Research CEO), Gary Wang, and Nishad Singh. Legal analysts note that if similar settlements follow, FTX should regain a significant portion of the funds it lost during its crash. This move highlights FTX’s strategy to leverage legal pathways to address alleged preferential withdrawals and rebuild some of the financial gaps left in the wake of its collapse.
