FTX Debtors’ Lawsuit Aims To Recover $935 Million Transferred To Bybit And Others

FTX Debtors’ Lawsuit Aims To Recover $935 Million Transferred To Bybit And Others

Entities that are overseeing the bankruptcy process of the FTX crypto exchange have filed a new lawsuit to recover an amount of $935 million.

This sum had reportedly been transferred just before the company filed for Chapter 11 bankruptcy last year in November to Bybit’s investment arm and several others.

FTX had held assets on the Bybit platform and it has been accused of using them as leverage for forcing the transfer of about $20 million.

The lawsuit

The investment arm of Bybit is named Mirana Corp and it has been accused in the new lawsuit of suing its ‘VIP’ status to get a bigger chunk of the payment of $935 million made before the bankruptcy filing.

According to the lawsuit, the transfer had been made to cause problems for existing as well as future creditors of the leading crypto exchange, and defrauding them.

According to the bankruptcy managers of the company, the transfers in question that were made not only to Mirana Corp but also to Time Research and others, are fraudulent according to bankruptcy law.

Therefore, they said that FTX could demand the return of these transfers in full as per the law, along with interest that would benefit the debtors’ bankruptcy estates.

The breakdown

The lawsuit dictates that an amount of $837,815,847 had been transferred to Mirana Corp, while $47,995,279 had been sent to Time Research.

It was said in the lawsuit that the claim made by the now-defunct crypto exchange against Mirana Corp and Time Research could also get a new value.

As far as the calculation of this new value is concerned, the lawsuit says that this would depend on the deposits that the accounts of the two entities received once FTX had made the preferential transfer.

Assets hostage

Not only did the lawsuit accuse Bybit of fraudulent preferential treatment, but it also accused it of not honoring the transfer requests that had been made on the platform by FTX debtors.

Instead, the lawsuit dictated that Bybit had demanded that $20 million first be released to the investment arm, as it had not been able to withdraw the said amount from the exchange before withdrawals had been paused on November 8th, 2022.

The bankruptcy managers have claimed in the lawsuit that Bybit is currently holding approximately $125 million in assets of companies that are under the control of FTX.

The lawsuit said that there is no dispute over the ownership of said assets, but Bybit has held them hostage to help circumvent the bankruptcy process.

Therefore, the crypto exchange’s bankruptcy managers dictated that they would try to get the funds transferred to the debtors’ estate through judicial enforcement.

They said that it is their right to do so, as highlighted in the Bankruptcy Code.