Legal Action Against Bybit Amid Bankruptcy

FTX’s bankruptcy managers have taken legal action against Bybit crypto exchange and two other entities in a bid to recover $953 million in assets withdrawn before the collapse of FTX.

This move follows recent efforts by the bankruptcy managers to reclaim the exchange’s funds from various parties.

On 10 November, advisers overseeing the bankruptcy proceedings initiated legal action by filing a lawsuit against Bybit and its investment entity, Mirana Corp.

The lawsuit alleges that Bybit, along with Mirana Corp., was allegedly strong-armed into processing $953 million in withdrawals before FTX’s collapse.

Mirana Corp. is accused of having special privileges enabling asset withdrawals from FTX and pressuring FTX employees to facilitate these withdrawals.

FTX Group Assets

The filing contends that Bybit used its control over FTX Group assets as leverage to pressure FTX.com into prioritising Mirana Corp.’s withdrawals.

Bybit allegedly seized FTX Group assets, refusing to release them unless Mirana Corp. completed the withdrawal of its entire FTX.com account balance.

The filing reads:

“Defendant Bybit also used its control over FTX Group assets as an additional source of leverage to try to force FTX.com to push Mirana to the front of the line. After the FTX.com exchange halted customer withdrawals, Bybit seized FTX Group assets held on Bybit’s exchange, refusing to release them unless and until Mirana was able to finish withdrawing the entire balance of its FTX.com account.”

The lawsuit aims to recover the $953 million in assets Mirana withdrew from FTX, including over $327 million withdrawn between 7 November and 8 November last year.

The lawsuit also implicates another crypto trading firm, Time Research Ltd, and a Mirana executive, suggesting that some Singaporean residents may have benefited from these withdrawals.

FTX’s Ongoing Asset Recovery Efforts

The legal action aligns with FTX’s broader efforts to recover funds withdrawn before its collapse.

FTX aims for an equitable distribution of assets among all victims of its failure.

Since the commencement of bankruptcy processes, FTX has recovered $7 billion worth of assets.

Lawsuits and Recovery Strategies

FTX has filed various lawsuits, including against its former executives like Sam Bankman-Fried, Caroline Ellison, Gary Wang, and Nishad Singh.

The failed firm has also filed lawsuits against several other entities, including K5 Global, that received funds from it.

Concurrently, the FTX estate is engaged in optimising its cryptocurrency holdings, with a transfer of more than $300 million in crypto assets, encompassing Solana and Ethereum, to exchanges by 8 November.

* Original content written by Coinlive. Coinbold is licensed to distribute this content by Coinlive.

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