Cryptocurrency trading platform FTX, having faced the heat in a lengthy lawsuit, is finally seeing a light at the end of the tunnel. The saga started after the company’s catastrophic collapse in 2022. Its bankruptcy estate recently agreed to a hefty $228 million settlement with another cryptocurrency player, Bybit exchange. The settlement ties up a loose end in a legal battle that has been unfolding since 2023 when the suit was first lodged by the FTX estate. The money recovered will be used to reimburse the platform’s former customers and creditors.
As part of the agreement, FTX got the green light to consolidate $175 million worth of digital assets currently held on Bybit. The bankruptcy estate will also sell a neat $53 million of BIT tokens to Mirana Corp, an investment arm of Bybit. The attorneys for FTX admitted that while their case has weight, continuing to battle would be laborious and expensive. It’s worth noting that the arrangement still needs the stamp of a judge, and a court hearing is scheduled for November 20th, 2024.
The initial lawsuit filed by FTX against Bybit and Mirana was pricier, at a whopping $1 billion. FTX accused the entities of using privileged access to withdraw about $327 million in digital assets and cash, just before FTX’s collapse. Allegedly, the FTX team granted some parties, including Mirana, preferential withdrawal rights ahead of the platform’s downfall.
This settlement with Bybit is not the first litigation that the FTX estate has had to resolve during its drawn-out bankruptcy process. On October 7, 2024, with the approval of FTX’s reorganization plan by Judge John Dorsey, FTX investors voluntarily dropped their case against Sullivan & Cromwell, the law firm that was behind FTX’s multiple transactions when it was still a functioning company. These investors had earlier accused the law firm of knowing about, and profiting from, the fraudulent activities at FTX.