FTX’s bankruptcy advisors have filed a lawsuit against Bybit Fintech Ltd., seeking to recover $953 million in cash and digital assets. This legal action comes after Bybit allegedly withdrew the funds just before FTX filed for Chapter 11 bankruptcy in November.
FTX Accuses Bybit of Unfair Withdrawals Pre-Bankruptcy
FTX’s bankruptcy advisors have initiated legal proceedings against Bybit Fintech Ltd., seeking the recovery of a whopping $953 million. The lawsuit, filed on November 10 in a Delaware court, alleges that Bybit’s investment arm, Mirana Corp., exploited special privileges to withdraw a substantial amount of funds from FTX just before its collapse in November 2022.
According to the claims, Mirana received preferential “VIP” treatment that was not available to other clients of FTX. This special access allegedly allowed Mirana to move a significant portion of its assets out of FTX, contributing to the exchange’s liquidity crisis.
Lawsuit Targets Unfair Practices in Asset Recovery
The lawsuit against Bybit Fintech Ltd. and Mirana Corp. details allegations of undue pressure applied by Mirana on FTX staff to expedite withdrawal requests, while other clients faced delays.
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Mirana reportedly withdrew over $327 million just before FTX halted withdrawals on November 8, 2022. The legal action seeks to recover these funds along with additional assets, totaling $953 million.
The defendants named in the bankruptcy lawsuit include Bybit Fintech Ltd., Mirana, and Time Research Ltd., a related cryptocurrency trading firm. A senior Mirana official who was involved during the relevant period, along with several Singaporean citizens, are also implicated.
These individuals are alleged to have either benefited from or played a role in the withdrawals from FTX that are now central to the bankruptcy case.
Chapter 11 Implications and FTT’s Surprising Rally
In the months leading up to its bankruptcy filing, FTX’s situation exemplifies the purpose of Chapter 11 bankruptcy, which is to give struggling companies an opportunity to recover lost funds. Under Chapter 11, insolvent businesses are prohibited from providing preferential treatment to certain creditors who managed to withdraw their funds before others.
This legal framework aims to ensure a more equitable distribution of assets among all creditors, preventing the prioritization of some over others during a financial crisis.
Despite the tumultuous events surrounding FTX’s bankruptcy, the company’s native token, FTT, has seen an unexpected surge in value. According to CoinMarketCap data, FTT’s price has risen by 53.97% in the last 24 hours and a remarkable 241.53% over the past week.
This significant rally in FTT’s price amidst the company’s legal and financial woes is a notable occurrence, reflecting the often unpredictable nature of cryptocurrency markets.
This price movement may be influenced by a variety of factors, including market speculations and investor reactions to the ongoing developments in FTX’s bankruptcy case.