By reaching a settlement to collect $228 million, FTX has taken a major step toward its bankruptcy recovery strategy by settling a high-stakes case with Bybit. FTX’s bankruptcy estate filed the complaint in 2023, alleging that Bybit and its investment arm Mirana used “VIP” withdrawal rights to remove more than $300 million in assets shortly before FTX’s failure in 2022. In order to compensate clients and creditors affected by its demise, FTX attempted to recover these funds.
The conditions of the settlement state that FTX would sell Mirana about $53 million worth of BIT tokens and recover $175 million in digital assets stored on Bybit’s network. A controversial phase of FTX’s asset recovery attempts may come to an end with the deal, which is still pending court approval. On November 20, 2024, a court hearing will finalize the deal between FTX and Bybit.
The two parties negotiated for months before reaching this agreement, during which FTX’s bankruptcy estate argued that going to court would be an expensive and time-consuming process. In order to avoid more litigation costs and delays, the parties instead came to an agreement that recovers almost all of the money FTX sought from Bybit.
The approval of FTX’s reorganization plan earlier this month has significantly simplified asset collection and repayment procedures. Supported by more than 94% of creditors, the plan suggests giving almost all creditors a return of at least 118% of claim values. In line with FTX’s objective to optimize asset recovery and rebuild confidence with its previous clients, this Bybit settlement is now crucial in obtaining more money for repayment.
The FTX-Bybit settlement serves as an example of a successful strategy for settling intricate legal challenges for the larger crypto sector. Avoiding drawn-out litigation shows that cooperation is possible even in difficult circumstances and offers a quicker route to customer repayment. This settlement represents a positive step toward increased stability in the cryptocurrency market as FTX gets closer to ending its bankruptcy procedures and fulfilling its obligations to impacted consumers.
