Genesis

Million

FTX&nbsp;<a style="text-decoration:none" href="https://www.bloomberglaw.com/public/desktop/document/FTXTradingLtdDocketNo122bk11068BankrDDelNov112022CourtDocket/44?doc_id=XQBV3HMT2F8HUOV83OJGH6MMG5">settled</a> its lawsuit against the crypto exchange Bybit for an amount of $228 million, after a year of legal battles. This deal allows FTX to recover a portion of the assets lost during the crypto crash of 2022, providing much-needed funds to pay back former customers and creditors.
<h2 dir="ltr" id="span-span-from-953-million-to-228-million-span-span">From $953 Million to $228 Million</h2>
The&nbsp;<a style="text-decoration:none" href="https://restructuring.ra.kroll.com/FTX/Home-DocketInfo">original lawsuit</a>, initiated in late 2023, sought to reclaim approximately $953 million from Bybit. FTX accused Bybit’s investment arm, Mirana, of receiving preferential treatment, allowing it to withdraw nearly $500 million right before FTX halted withdrawals.&nbsp;
&nbsp;
This preferential treatment allegedly reduced available funds for FTX’s other customers. The lawsuit filed on November 10, 2023, detailed how Mirana was able to withdraw approximately $327 million worth of cryptocurrency during a critical period.
&nbsp;
The dispute escalated as FTX claimed that Bybit restricted its access to recover assets held on Bybit’s platform, effectively holding them “hostage.”
&nbsp;
Although the final settlement amount falls short of the initial claim, it represents a win for FTX's bankruptcy estate.
&nbsp;
In court filings, FTX emphasized that this arrangement brings “significant net savings for the debtors’ estates.” By settling, FTX avoids the uncertainties and costs associated with prolonged litigation.&nbsp;
<blockquote>
 “Through the Settlement Agreement, the Debtors will be recovering substantially everything that they seek to recover,” the filing read.&nbsp;
</blockquote>
<h2 dir="ltr" id="span-span-implications-of-the-settlement-span-span">Implications of the Settlement</h2>
The settlement allows FTX’s liquidation estate to reclaim $175 million in cryptocurrencies from Bybit accounts. As part of the agreement, FTX plans to sell over 105 million BIT tokens held by Mirana, valued at around $52.7 million.&nbsp;
&nbsp;
Additionally, customers who withdrew funds from FTX before its bankruptcy will still be eligible to claim 75% of their aggregate balance as of the petition date.
&nbsp;
FTX’s bankruptcy expert, John J. Ray III, noted that over&nbsp;<a style="text-decoration:none" href="https://restructuring.ra.kroll.com/FTX/Home-DownloadPDF?id1=MzIxNDIwMw==&amp;id2=-1">94% of creditors</a> have voted in favor of the company’s reorganization plan. The District of Delaware Bankruptcy Court approved this plan, which aims to repay 98% of creditors at least 118% of their claim value in cash. This plan aims to help FTX wind up its affairs while returning funds to customers after Genesis Global Capital, a major lender, filed for bankruptcy in January.
<h2 dir="ltr" id="span-span-legal-complexities-span-span">Legal Complexities</h2>
In parallel court proceedings, FTX’s legal team highlighted that this settlement paves the way for the confirmation of Genesis’s chapter 11 reorganization plan.&nbsp;
&nbsp;
FTX’s original claims against Genesis amounted to $3.88 billion, covering loan repayments made by its hedge fund arm, Alameda Research, and assets withdrawn by Genesis from FTX before its collapse.
&nbsp;
Bybit's settlement with FTX also serves as a strategic move for the company, which can focus on recovery while coping with legal uncertainties. In a statement regarding the settlement, Ray remarked that the deal was fair and in FTX’s best interests, given the ongoing legal challenges.

FTX Settles $228M Lawsuit with Bybit, Aims for $175M Recovery

Table of Contents

BSCN

Other articles published on Oct 29, 2024

Ripple News: Are XRPL Meme Coins in Hot Water with the SEC? Here’s Why

ApeChain Launches on Mainnet With Arbitrum Orbit

Hong Kong Crypto Tax Incentives Revealed Amid Circle-HKT Alliance

Technology Firm Circle Signs Partnership Agreement With Hong Kong Telecommunications Company! Her...

GraFun Partners with Floki and DWF Labs to Support Emerging Memecoins

Unraveling the Surge: Inside Bitcoin’s Spike to $71K Today

Join our free newsletter for daily crypto updates!