FTX’s bankruptcy advisers have filed a lawsuit against crypto exchange Bybit Fintech and its two affiliated companies in an effort to recover approximately $953 million in cash and digital assets. These assets were allegedly withdrawn from Sam Bankman-Fried’s FTX exchange prior to its Chapter 11 filing a year ago.
The lawsuit, filed in a Delaware court, contends that Bybit’s investment arm, Mirana Corp., enjoyed special “VIP” benefits not available to most FTX customers. It alleges that Mirana took advantage of these privileges to withdraw a substantial portion of its assets from FTX just before its collapse in November 2022.
The complaint asserts that Mirana pressured FTX employees to fulfill its withdrawal requests, while regular customers of FTX.com were left waiting for hours to access their funds as the exchange faced imminent collapse.
The lawsuit is seeking to recover assets totaling around $953 million, including more than $327 million that Mirana allegedly withdrew from FTX between the early morning of November 7 and November 8, 2022, when FTX paused withdrawals.
Defendants in the bankruptcy lawsuit include Bybit Fintech Ltd., Mirana, and affiliated crypto trading firm Time Research Ltd. Additionally, it lists a senior Mirana executive and Singaporean residents who are alleged to have benefited from or played a role in the FTX withdrawals, which are now subject to the bankruptcy proceedings.
Chapter 11 bankruptcy typically provides failed companies with the opportunity to recover funds in the months leading up to the filing.
The provision in Chapter 11 bankruptcy, aimed at preventing certain creditors from unfairly benefiting by withdrawing their funds from a failing business while others couldn’t, is designed to promote equitable treatment among creditors.
In the lawsuit, FTX stated that it calculated the value of the assets withdrawn by Bybit and its affiliates using November 1 pricing, with the potential to supplement pricing information as the litigation progresses.
The complaint also acknowledges the possibility that some of its legal claims may be subject to “subsequent new value” defenses. This defense might be raised to argue that the withdrawals provided new value to FTX, potentially complicating the recovery efforts.
FTX Ramps Up Efforts to Recover Lost Funds
The lawsuit against Bybit is part of a broader series of legal actions initiated by FTX’s new management to reclaim funds disbursed before its Chapter 11 filing in November of the previous year.
FTX has also taken legal action against Kives and his venture capital firm, K5, aiming to recover the estimated $700 million that Bankman-Fried had invested in it. The complaint characterizes Bankman-Fried as a “profligate patron” who sent millions to Kives, K5 Global, and Baum after attending a social event hosted by Kives in 2022.
Additionally, FTX has sought to recover funds donated to politicians and charitable organizations, including the Metropolitan Museum of Art in New York. Recently, the company’s advisers revealed an investigation into the possibility of reclaiming millions of dollars paid to celebrities, including Shaquille O’Neal and Naomi Osaka, for their endorsements of the platform.
