FTX Sues Bybit in Attempt to Recover $953M Withdrawn Prior to Chapter 11 Filing
FTX management has been trying to recover funds from multiple sources including beneficiaries of donations made by the firm and its former CEO Sam Bankman-Fried.
FTX bankruptcy advisors have sued cryptocurrency exchange ByBit Fintech Ltd in an attempt to recover funds withdrawn prior to its collapse. According to a Bloomberg report, FTX management filed a lawsuit in a Delaware court on Friday against Bybit’s investment branch, Mirana Corporation and two corporate affiliates.
FTX’s bankruptcy advisers sued crypto exchange Bybit and two corporate affiliates to recover cash and digital assets valued at roughly $953 million https://t.co/Vy607xzNkO
— Bloomberg Crypto (@crypto) November 11, 2023
The defunct crypto business is attempting to recover about $953 million in cash and digital assets withdrawn by Bybit before FTX’s collapse and Chapter 11 filing. The suit alleges that Bybit used “special privileges,” pressuring FTX employees to process their withdrawal request earlier than other FTX customers who had to wait hours to get their assets from the exchange. Bybit’s co-accused are a crypto trading firm called Time Research, a Mirana c-suite executive and Singaporeans who allegedly either benefited from or participated in withdrawals.
It is further supposed that of the $953 million, Mirana Corp withdrew more than $327 million on November 8, 2022 – after FTX had suspended withdraws on the exchange. FTX hopes to recover some of these funds. Businesses that have filed for bankruptcy under Chapter 11 of the United States Bankruptcy Code are typically allowed to reclaim funds dispensed during the months leading up to a filing. This measure was put in place to prevent some creditors from gaining an unfair advantage over a failing business by withdrawing their funds when others can’t do it.
FTX management has been trying to recover funds from multiple sources including beneficiaries of donations made by the firm and its founder and former CEO Sam Bankman-Fried. The bankruptcy advisors have launched lawsuits against former brand ambassadors for the exchange including Naomi Osaka and Shaquille O’Neal and former employees of its Hong Kong affiliate who allegedly took more than $157 million from the exchange fraudulently before its collapse. In September, Stanford University announced plans to return about $5.5 million in gifts received from “FTX-related entities from November 2021 to May 2022.”
Meanwhile, several potential investors have taken a keen interest in reviving the defunct exchange. These include former New York Stock Exchange (NYSE) president Tom Farley, fintech company Figure Technologies and specialist crypto investment entity Proof Group.
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