The FTX bankruptcy estate has agreed to a $228 million settlement with Bybit, resolving a legal dispute filed in 2023. This settlement marks a significant step in FTX’s efforts to recover funds for its former customers and creditors following the exchange’s 2022 collapse.
Settlement Details and Agreement
In the legal filing from October 24, 2024, FTX confirmed the settlement will allow it to retrieve $175 million in digital assets from Bybit. Additionally, approximately $53 million in BIT tokens will be sold to Mirana Corp, an investment arm of Bybit. While attorneys for FTX believe their claims were valid, they acknowledged that continuing the litigation would be costly and time-consuming.
The agreement still requires court approval. A hearing is scheduled for November 20, 2024, at 2 PM Eastern, where the settlement terms will be reviewed.
Background: FTX’s $1 Billion Lawsuit Against Bybit
The lawsuit stems from accusations that Bybit and Mirana used “VIP” access to withdraw around $327 million in digital assets and cash just before FTX’s collapse in 2022. Filed in November 2023, the lawsuit claims that Bybit and other entities were granted special withdrawal privileges by FTX executives, a priority that other customers did not have. These withdrawals allegedly took place during the critical phases leading to the exchange’s downfall.
Progress in FTX Bankruptcy Proceedings
The settlement with Bybit is just one of many legal battles FTX has faced during its ongoing bankruptcy process. After Judge John Dorsey approved FTX’s reorganization plan on October 7, 2024, a separate lawsuit against the law firm Sullivan & Cromwell was voluntarily dropped by FTX investors. The investors had accused the firm of being complicit in FTX’s fraudulent activities while benefiting financially from its continued legal representation of the company.
As FTX continues its efforts to resolve bankruptcy-related litigation, the Bybit settlement brings the estate closer to concluding its legal hurdles and distributing funds to creditors.
