FTX to receive $53M BIT tokens following $228M settlement with Bybit

In a significant development in the ongoing saga of the FTX bankruptcy proceedings, the FTX bankruptcy estate has reached a $228 million settlement with crypto exchange Bybit and its investment division, Mirana.

The agreement, revealed in an October 24, 2024 court filing, marks a crucial step in FTX’s efforts to recover assets for its creditors as it navigates the complexities of its financial downfall.

Terms of the $228 million settlement

Under the terms of the settlement, FTX is set to receive $175 million in digital assets along with $53 million worth of BIT tokens.

This resolution comes after FTX initially sought to reclaim approximately $1 billion from Bybit and Mirana, alleging that the companies exploited their “VIP” status to withdraw around $327 million shortly before FTX’s collapse in November 2022.

FTX’s legal team argued that Mirana pressured FTX staff to expedite withdrawal requests, allowing them to bypass delays faced by ordinary users.

The FTX legal team filed a lawsuit in a Delaware court in November 2023 implicating individuals believed to have benefited from these transactions, including associates based in Singapore and a Mirana executive.

FTX’s bankruptcy advisors claimed that Mirana and others were granted preferential withdrawal access due to their close ties with FTX executives, as evidenced by an internal database tracking large withdrawals that occurred even after FTX had paused user withdrawals on November 8, 2022.

The FTX settlement with Bybit is scheduled for approval in November

A hearing to finalize the settlement is scheduled for November 20, 2024.

If approved, it will enable FTX to reclaim $175 million in digital assets held on Bybit’s platform and sell approximately $52.7 million worth of BIT tokens to Mirana.

The settlement is seen as a pragmatic move by FTX’s legal representatives, who acknowledged that while their claims had merit, further litigation would be both time-consuming and costly.

Settling the case allows the embattled crypto exchange to recover some assets without additional delays.

This settlement follows the approval of FTX’s bankruptcy plan on October 7, 2024, which aims to repay 98% of users about 118% of their claims in cash.

As the bankruptcy proceedings unfold, several former top executives of the defunct crypto exchange have reached plea deals with federal prosecutors.

Notably, a significant figure, who cooperated with authorities, received a reduced prison sentence of two years.

As FTX navigates this complex landscape, the implications of the settlement with Bybit extend beyond mere financial recovery; it represents a crucial step towards restoring confidence among creditors and investors in the volatile cryptocurrency market.

While the FTX Token (FTT) remains inactive amid bankruptcy proceedings, the settlement underscores the ongoing efforts to untangle the fallout from one of the largest collapses in cryptocurrency history.

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