TLDR
#FTX has filed a lawsuit against Bybit Fintech Ltd and Mirana Corp., seeking to recover around $953 million in cash and digital assets withdrawn from its platform before its collapse.
The lawsuit alleges that Mirana used its VIP status on FTX to unfairly prioritize its withdrawals over regular customers, especially during the exchangeâs insolvency crisis.
The case, part of FTXâs Chapter 11 bankruptcy proceedings, aims to ensure equitable distribution of assets among creditors by recovering funds withdrawn before the bankruptcy filing.
FTX has escalated its legal battles by filing a lawsuit against Bybit Fintech Ltd and its investment arm, Mirana Corp. The lawsuit, lodged in a Delaware court, seeks a staggering recovery of approximately $953 million. This amount represents the value of assets and cash that FTX alleges was unfairly withdrawn from its platform by Bybit and Mirana.
At the heart of FTXâs complaint is the accusation that Mirana enjoyed âVIPâ benefits on the FTX platform. These privileges were not available to regular customers. FTX claims that Bybitâs investment arm leveraged these advantages to withdraw significant assets from the exchange, particularly during its tumultuous collapse in November 2022. The lawsuit details that more than $327 million was withdrawn between November 7 and 8, 2022, a critical period when FTX had paused all withdrawals.
Bybitâs alleged influence and withdrawal tactics
FTXâs legal action paints a picture of Bybit and Mirana exerting undue pressure on FTX employees. This coercion, FTX alleges, was to prioritize their withdrawal requests over regular customers during the exchangeâs insolvency crisis. The complaint suggests that Mirana used its influence to deplete the funds available for other customersâ withdrawal requests.
Under Chapter 11, companies in distress, like FTX, can attempt to recover funds withdrawn before bankruptcy filings. This provision is intended to ensure a fair distribution of assets among creditors. FTXâs lawsuit against Bybit, therefore, aligns with these bankruptcy proceedings, aiming to recoup funds that were allegedly unfairly extracted by Bybit and Mirana.
At this juncture, Bybitâs representatives have not commented on the allegations. Similarly, an FTX spokesman has refrained from commenting on the ongoing legal matter. The lawsuit targets Bybit and Mirana and names Time Research Ltd and several individuals, including a senior Mirana executive and Singaporean residents allegedly connected to the withdrawals.
FTXâs case, titled FTX Trading Ltd., 22-11068, in the US Bankruptcy Court for the District of Delaware, is set to unfold further. The litigationâs progress will likely provide more insights into the valuation of assets and the extent of legal claims. FTX, in its pursuit, will also contend with potential defenses based on the concept of âsubsequent new value.â
The unfolding of this lawsuit signals a critical phase in the aftermath of FTXâs collapse