FTX filed a billion dollar lawsuit against Bybit over the asset withdrawal
The bankruptcy estate of FTX, led by CEO John J. Ray III, filed a lawsuit against Bybit, its investment arm Mirana and various executives. The aim is to recoup the money and digital assets that Byte took out of FTX before its collapse, which is now worth close to $1 billion.
The lawsuit alleges that Byte Byte used its “VIP” access and ties to FTX employees to extract significant cash and digital assets from Mirana, Time Research (another Bybit-related entity) and executives prior to FTX's collapse.
During FTX's November 2022 withdrawal problems, FTX staff tracked withdrawal requests from VIP customers in a spreadsheet named “VIP Request – Prioritize (Settlement)”. The suit alleges that the FTX settlement team has made significant efforts to transfer more than $327 million to Mirana in advance of significant withdrawals.
The lawsuit alleges that ByBit imposed restrictions on FTX assets and prevented more than $125 million in assets from being floated on the ByBit exchange. Allegedly, Byte is using these assets as leverage to recoup the $20 million balance that it was unable to disburse prior to the FTX collapse.
The allegation came in October 2021, when a ByBit executive told FTX privately that the company presented BitDAO, now known as Mantle, as a decentralized organization run by community members. Then, in May 2023, ByBit approached the FTX bankruptcy estate to reverse the transaction, even though the value of the BIT tokens, at the time about $50 million, far exceeded the value of the FTT tokens, at the time about $4 million.
After FTX rejected the “unreasonable proposal,” BitDAO quickly renamed Mantle and introduced MNT tokens for BIT holders to exchange at a 1:1 ratio. As soon as FTX started exchanging, BitDAO disabled it and held a “community vote” to decide whether FTX was restricted from exchanging the tokens.
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According to the lawsuit, FTX notified Bybit that its actions would violate the automatic stay in Chapter 11 bankruptcy. Despite this, the “community vote” has passed, votes seem to be related to Baybit executives. Notably, the fifth largest volume came from the wallet “dtoh.eth”, a subsidiary of Mirana Ventures led by David Toh.
The legal action is seeking “compensatory and punitive damages” from Baybit regarding the token scheme and assets held on the platform.
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