FTX Settles Lawsuit with Bybit, Will Withdraw $175M in Digital Assets

The bankrupt crypto exchange FTX announced a $228 million settlement with Bybit on October 24th, ending a prolonged lawsuit that aimed to recover funds.

Bankrupt crypto exchange FTX has announced a $228 million settlement with Bybit, a move that will end a prolonged lawsuit and allow FTX to recover a portion of the funds it lost.

According to a court filing on October 24, the settlement will permit FTX to withdraw $175 million in digital assets from Bybit. Additionally, FTX will sell approximately $53 million in BIT tokens to Bybit’s investment division, Mirana Corp.

Back in November 2023, FTX filed a lawsuit against Bybit and two other corporate affiliates. The lawsuit alleged that these entities had benefited unfairly from FTX and sought to recover $953 million in funds and assets.

The amount was determined based on the value of the withdrawn assets on November 1. However, the settlement reached is significantly less than the amount initially claimed by FTX.

Defendants who withdrew funds before the bankruptcy will receive creditor claims worth 75% of their account balances.

FTX lawyers acknowledged that pursuing further legal action would be challenging despite believing in the validity of their claims.

“Plaintiffs’ claims for turnover, violations of the automatic stay, and fraudulent and preferential transfers are disputed, carry some degree of risk, and in any event would be time-consuming and expensive to further litigate,” they stated.

The settlement now awaits court approval, with a hearing scheduled for November 20, 2024, at 2 PM Eastern Time. This step is crucial to finalize the agreement and make it legally binding.

In the filing, FTX highlighted that the settlement will save the debtors’ estates a substantial amount of money. It also helps to avoid the uncertainty and costs of a lengthy legal battle.

“Through the settlement agreement, the debtors will be recovering substantially everything that they seek to recover,” FTX stated.

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