TX Trading Ltd. is willing to settle for $228 million with cryptocurrency exchange Bybit and its venture capital arm Mirana Corp. The settlement was reached as part of FTX bankruptcy proceedings, in which the latter emerged with substantial recoveries from funds deposited with Bybit. Results have emerged after a lawsuit against Bybit for allegedly unfairly withdrawing its money when FTX went down in the last months of 2022.
FTX Lawsuit Against Bybit
FTX sued Bybit in late 2023, claiming the firm used its privileged position to siphon $327 million in assets off the exchange just prior to declaring bankruptcy. The lawsuit claimed this would be prioritizing withdrawals by Bybit against those customers and would amount to essentially holding FTX's funds hostage during a time of high need. The legal team of FTX had pointed out that these withdrawals increased the financial stress the exchange was going through when trying to handle the collapse.
Details of the Settlement
On October 24, 2024, FTX filed a motion before the U.S. Bankruptcy Court for the District of Delaware to approve the settlement with Bybit. According to this agreement, FTX will recover nearly $175 million in digital assets from Bybit's exchange.
FTX also plans to sell BIT tokens to Mirana Corp. for about $53 million, further streamlining its asset recovery process. FTX said that it had entered into this agreement as it allows significant savings and avoids the burden of long-drawn litigation, besides securing substantial recovery for its stakeholders.
Implications of the Ruling on FTX's Bankruptcy Process
This settlement is an important twist in the FTX restructuring process. It is currently implementing a wind-down plan sanctioned earlier by the court. The plan aims to return at least $12.6 billion to customers whose digital assets remain stuck on the platform. FTX termed this Bybit settlement as integral to this goal of providing restitution to affected customers while minimizing risks and costs associated with ongoing litigation.
These firms, Sullivan & Cromwell LLP and Landis Rath & Cobb LLP, had been part of the legal counsel team representing FTX and argued the settlement was vital to pushing the bankruptcy process forward. The defendants, Bybit and Mirana Corp., were represented by Norton Rose Fulbright US LLP and other legal counsel.
Considering that FTX is still operational under bankruptcy, the settlement of this lawsuit against Bybit is one of the major works in the process toward financial recovery and rebuilding of stakeholder confidence. A case of this magnitude, such as In re FTX Trading Ltd., is being brought to bear as the limelight of proceedings shifts to the Delaware court system.
.webp)
.webp)
