FTX Settles Suit Against Crypto Firm Bybit for $228 Million

FTX Trading Ltd. agreed to drop sprawling litigation against Bybit Fintech Ltd. and related entities in a deal worth roughly $228 million that will allow FTX to withdraw assets from Bybit’s cryptocurrency exchange.

FTX asked the US Bankruptcy Court for the District of Delaware on Thursday to approve a settlement it reached with Bybit and related defendants following months of negotiations. The deal will allow FTX’s liquidating estate to recover $175 million worth of digital assets being held on Bybit’s exchange and sell BIT tokens to Bybit’s investment arm, Mirana Corp., for nearly $53 million.

FTX alleged in its suit last year that Mirana used special privileges to withdraw $327 million worth of assets off Sam Bankman-Fried’s platform before its collapse in November 2022, as other account holders struggled to do the same.

As part of the settlement, the defendants that withdrew funds just before the bankruptcy will be allowed creditor claims equal to 75% of the aggregate balance in their accounts as of the date FTX filed for bankruptcy, “generating significant net savings for the debtors’ estates,” FTX said in the filing.

“Through the Settlement Agreement, the Debtors will be recovering substantially everything that they seek to recover,” the company said. “The Settlement Agreement also allows the Debtors to secure this significant recovery for their stakeholders while avoiding the expense, uncertainty, and burden of continued litigation and any potential risks associated with enforcing any judgment abroad.”

The deal is one of several inked by CEO John J. Ray III, who took over FTX and its related entities as the exchange declared bankruptcy two years ago. The company received court approval earlier this month to execute a wind-down plan and distribute at least $12.6 billion to customers whose digital assets have been trapped on the platform.

FTX is represented by Sullivan & Cromwell LLP and Landis Rath & Cobb LLP. The defendants are represented by Norton Rose Fulbright US LLP, Cooley LLP, Saul Ewing LLP and Herbert Smith Freehills LLP.

The case is In re FTX Trading Ltd., Bankr. D. Del., No. 22-11068, motion filed 10/24/24.