Interesting: FTX Estate Sues Bybit to Return $953M In Allegedly ‘Misappropriated Funds’

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In a recent development in the cryptocurrency sector, the estate of the now-bankrupt U.S. crypto firm FTX has initiated legal action against Bybit, a competing exchange platform. The lawsuit, filed in Delaware, seeks the recovery of approximately $953 million. This sum represents assets and cash that FTX alleges were improperly withdrawn by Bybit’s investment arm, Mirana Corporation, prior to FTX’s bankruptcy declaration.

The lawsuit, according to FXStreet, asserts that Mirana Corporation was granted special VIP privileges at FTX, which were not available to the majority of FTX‘s clientele. These privileges allegedly enabled the investment branch to withdraw substantial assets from FTX just as the exchange was on the brink of filing for bankruptcy last year. Bybit has not yet issued a response to these allegations or the lawsuit.

Further reporting from Coinpedia reveals that FTX‘s bankruptcy advisers have accused Bybit Fintech Ltd. of exploiting its investment wing, Mirana, to withdraw the majority of its assets from FTX just before the exchange filed for Chapter 11 bankruptcy in November 2022. The suit contends that this withdrawal of digital assets and cash, valued at $953 million, was facilitated by exclusive privileges granted to Mirana Corp.

CoinMarketCap’s coverage underscores the urgency and magnitude of FTX’s efforts to reclaim what it describes as “misappropriated funds.” These efforts have included legal actions against former FTX executives and even the family members of FTX founder Sam Bankman-Fried (SBF).

The complaint lodged on Friday detailed that Mirana received transfers from FTX of digital assets currently valued at around $838 million. Remarkably, about $500 million of this was transferred just days before FTX ceased withdrawals on November 8, 2022. Additionally, the lawsuit alleges transfers of an extra $115 million in digital and fiat assets to entities and individuals linked with Bybit and Mirana.

The FTX estate contends that Bybit was granted VIP status on the FTX exchange, which allowed Mirana and its affiliates to withdraw assets rapidly from their FTX accounts in the days leading up to the bankruptcy filing. The suit also claims that FTX employees were pressured to prioritize Mirana’s withdrawal requests, thereby diminishing the funds available for non-VIP customers.

The lawsuit seeks the return of assets that were allegedly transferred preferentially or fraudulently to Bybit and its affiliates. These assets are claimed to be currently “held hostage” by Bybit.

This legal action comes amidst broader accusations against FTX‘s former management, who have been charged with misappropriating customer funds. SBF, the co-founder and former CEO of FTX, was recently found guilty of fraud against FTX customers by a New York jury and is awaiting sentencing next year. This case highlights the ongoing challenges and legal complexities in the rapidly evolving world of cryptocurrency.

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