FTX Trading Ltd., the now-defunct cryptocurrency exchange, has reached a significant settlement in its ongoing litigation against Bybit, including its executives and the investment arm Mirana Corp. This agreement, if approved by the court, will allow FTX to reclaim approximately $228 million—an essential step in its recovery process aimed at repaying creditors impacted by its abrupt collapse in late 2022. The deal, presented in a court document dated October 24, signifies a critical milestone for FTX in its battle to recuperate funds for its former customers.
The settlement specifies that FTX will recover $175 million in cryptocurrency assets that are currently on Bybit’s platform. In addition, it includes the sale of BIT tokens valued at $52.7 million to Mirana, which is aligned with Bybit’s financial infrastructure. The FTX estate justified this settlement as a measure taken in the “best interests” of everyone involved. They argued that the settlement minimizes uncertainty, which could arise from prolonged legal battles that would likely disperse valuable resources needed for payout to creditors. Additionally, FTX has requested a waiver for the standard 14-day waiting period following court approval, indicating urgency in the distribution of these assets.
FTX’s bankruptcy was among the most high-profile collapses in the cryptocurrency industry, triggering widespread instability and litigation. Following its bankruptcy filing in November 2022, the firm initiated multiple lawsuits to recover lost assets. Notably, this specific suit against Bybit was launched exactly a year after FTX’s downfall, with the estate originally pursuing an eye-popping $1 billion in damages. The allegations claim that Bybit exploited its privileged access to FTX to extract significant cash and assets even as it suspended withdrawals for everyday users during the crisis.
This settlement arrives in the wake of FTX’s bankruptcy plan approval on October 7, where it was confirmed that about 98% of the affected users would receive a reimbursement of around 118% of their claims in cash. The projections suggest FTX could potentially recover between $14.7 billion and $16.5 billion, significant amounts mainly thanks to assets seized through various regulatory channels, including aid from the US Department of Justice. This revitalized focus on recovery makes the resolution of the Bybit litigation particularly pivotal for FTX’s overall restructuring efforts.
The aftermath of FTX’s collapse has reverberated across the cryptocurrency sector, resulting in a series of legal actions and settlements. The sheer scale of combined settlements—including Alameda Research, FTX’s sister firm—has led to about $12.7 billion in financial penalties, marking an unparalleled moment in crypto litigation history. These events signal a critical juncture for regulatory agencies as they grapple with the need for stricter controls and clearer frameworks that govern digital assets, in hopes of preventing future crises like that of FTX. The resolution with Bybit, therefore, not only aids FTX but also sets a precedent for how similar cases may be handled in the future, possibly shaping the evolution of cryptocurrency regulations.
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