FTX Recovers $175 Million Worth of Crypto From Bybit in Settlement Agreement

The settlement was filed with the US Bankruptcy Court for the District of Delaware on Thursday. This decision is also one of the latest steps in FTX's efforts to recover assets

Crypto exchange FTX has reached a settlement agreement with Bybit, which will see the latter pay around $228 million to resolve a legal dispute over alleged preferential withdrawals prior to FTX’s collapse.

The settlement was filed with the US Bankruptcy Court for the District of Delaware on Thursday, as part of FTX’s ongoing efforts to recover assets for affected customers.

FTX to Recover $175 Million in Crypto

The agreement consists of two main components. Firstly, FTX will be recovering $175 million worth of crypto that is currently held on Bybit’s exchange.

Secondly, the settlement will see Bybit’s investment arm, Mirana, purchase a portion of BIT tokens from the exchange for nearly $53 million.

With this settlement, the dispute, which began with FTX’s allegations that Mirana received preferential treatment during the exchange’s final days, has now been resolved.

However, it is important to note that the settlement falls short of the $953 million that FTX’s bankruptcy estate initially sought in their November 2023 lawsuit against Bybit.

As per the terms of the settlement, defendants who withdrew funds just before the bankruptcy will receive creditor claims that are equal to 75% of their account balances as of the bankruptcy filing date.

In the filing, FTX highlighted that this arrangement generates “significant net savings for the debtors’ estates” by avoiding the uncertainties and costs associated with prolonged litigation.

“Through the Settlement Agreement, the Debtors will be recovering substantially everything that they seek to recover,” the exchange stated in the filing.

FTX Had Sought $953 Million from Bybit in 2023

The dispute began with FTX’s allegations that Bybit’s investment arm, Mirana, received preferential treatment during the exchange’s final days, which led to the initial lawsuit.

The lawsuit was filed on November 10, 2023, by the exchange and sought to recover approximately $953 million in cash and crypto. FTX claimed that Mirana’s VIP status allowed it to withdraw nearly $500 million just before it halted withdrawals.

Specifically, FTX alleged that Mirana, through its special privileges, was able to withdraw approximately $327 million worth of crypto from the platform while other account holders struggled to access their funds.

This preferential treatment was central to the claims against Bybit, with FTX also arguing that these actions reduced available funds for other customers.

Judge Approved $12.6 Billion Distribution Plan Earlier

The settlement is part of a broader resolution strategy being led by CEO John J. Ray III, who took over FTX in November 2022 and has overseen its bankruptcy proceedings.

Earlier this month, the company received court approval to carry out a wind-down plan, which will see the exchange distribute at least $12.6 billion to customers whose crypto has been stuck on the platform.

The legal proceedings involved several prominent law firms, with FTX being represented by Sullivan & Cromwell LLP and Landis Rath & Cobb LLP.

The agreement marks a significant development in FTX’s bankruptcy proceedings and ongoing efforts to recover assets for affected customers.

However, despite the news of the settlement, FTT’s price didn’t seem to be reacting positively. According to CoinMarketCap data, FTT was trading at $1.73 at press time.

In fact, contrary to the positive settlement, the coin was down by over 5.5% in the last 24 hours. A look at the price performance over the last seven days also showed that the price was down by over 16%.