FTX Files Lawsuit Against Bybit Exchange to Retrieve $1 Billion

FTX, the cryptocurrency exchange that faced financial difficulties and declared bankruptcy in November 2022, is taking legal action to recover almost $1 billion.

The exchange’s estate is suing ByBit, a prominent crypto platform, alleging irregularities in token deals and voting.

During FTX’s troubled period in November 2022, the exchange’s employees maintained a record of withdrawal requests from VIP customers in a spreadsheet labeled “VIP Request – Prioritize (Settlement).”

The lawsuit filed by FTX’s estate claims that FTX’s settlement team gave special priority to substantial withdrawals by Mirana, which is the investment arm of ByBit.

These prioritized transfers amounted to over $327 million, and in total, approximately $1 billion in assets were withdrawn from FTX and moved to Mirana.

In another concerning revelation, the lawsuit references a statement made by a ByBit executive in October 2021. The executive reportedly indicated that ByBit was in control of BitDAO, now known as Mantle, even though BitDAO was portrayed as being community-controlled.

Furthermore, in May 2023, ByBit proposed to FTX to reverse a token deal. ByBit wanted to exchange some tokens with FTX, but the offer was not financially favorable for FTX.

The BIT tokens that ByBit wanted to exchange were valued at $50 million, while the FTT tokens they were willing to offer were worth just $4 million at the time.

When FTX declined ByBit’s offer, BitDAO swiftly rebranded as Mantle and introduced new MNT tokens for BIT holders, allowing them to convert at a 1:1 ratio.

FTX sought to exchange its BIT tokens, but BitDAO halted the process and initiated a community vote to determine whether FTX should be allowed to trade. The outcome of this vote did not favor FTX.