Bybit accused of using VIP privileges to evade, FTX restructures team to sue for $953 million

The bankrupt exchange FTX has filed a lawsuit against another exchange Bybit and its affiliated companies in an attempt to recover approximately $953 million worth of cash and digital assets. These assets are alleged to have been improperly withdrawn before FTX filed for bankruptcy protection.

FTX Sues Bybit for Massive Lawsuit: Alleged Pressure to Withdraw Funds

According to Bloomberg, FTX's bankruptcy advisors allege that Bybit's investment arm, Mirana, used its special "VIP" status on the FTX platform to move a significant amount of assets out before the platform's collapse in November 2022. The lawsuit claims that Mirana pressured FTX staff to facilitate withdrawals, while regular customers struggled to access funds during the exchange's collapse. FTX is seeking to recover assets, including over $327 million withdrawn by Mirana on November 7th and 8th, 2022.

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Complexities and Implications of the Bankruptcy Lawsuit

This case names Bybit, Mirana, and Time Research as defendants, involving former Mirana executives and Singapore residents who are alleged to have benefited or played a role in the withdrawals. Under Chapter 11 bankruptcy law, FTX has the right to recover funds in the months leading up to the bankruptcy filing to ensure fair treatment of all creditors. Additionally, FTX stated that as the lawsuit progresses, there may be updates on asset valuations. This lawsuit is one of several brought by FTX's new management to recover funds paid out prior to filing for bankruptcy protection in November of last year. The case is docketed as FTX Trading Ltd., 22-11068, currently being heard in the U.S. Bankruptcy Court for the District of Delaware.

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