FTX, in bankruptcy proceedings, filed a lawsuit against the crypto exchange Bybit seeking to recover digital assets worth approximately $953 million that were withdrawn shortly before the collapse of Sam Bankman-Fried’s platform.
The plaintiffs also include West Realm Shires Services and Alameda Research.
The complaint alleges that Bybit’s investment arm — Mirana — enjoyed VIP privileges not available to most FTX customers. The company allegedly exploited these advantages to withdraw funds from the beleaguered exchange.
The plaintiffs noted that Mirana pressured FTX staff to speed up withdrawal requests at a time when users were forced to wait hours for transfers.
Of the total claims, Bybit’s structure withdrew approximately $327 million in cryptocurrency from FTX on November 7-8, 2022 — at a time when withdrawals had already been suspended.
Defendants in the suit also include Bybit’s trading subsidiary Time Research and a number of managers who either benefited from Mirana’s operations or helped organize them.
Chapter 11 of the U.S. Bankruptcy Code allows assets withdrawn in the months prior to filing for insolvency to be returned to the bankruptcy estate during restructuring. This provision is intended to ensure that certain creditors do not gain an advantage over others by siphoning their funds from the faltering business.
FTX said it valued the assets withdrawn by Bybit and its subsidiaries at November 1 exchange rates and may revise the amount of its claims as the proceedings unfold.
In May, FTX filed suit against Genesis demanding return $3.9 billion. Subsequently, the amount of claims was reduced to $2 billion. Ultimately, the companies agreed to pay $175 million to Alameda Research.
In July, FTX lawyers sought the return of $71 million from charitable subsidiaries affiliated with the exchange.
In September, the platform filed a suit against LayerZero demanding return $86 million and asserted claims against employees of the Hong Kong subsidiary for $157.3 million.
FTX clients may receive payments on the exchange’s claims totaling $9.2 billion by mid-2024, according to the creditors-approved plan.