FTX Seeks Recovery of Nearly $1 Billion from Bybit Fintech Ltd. Over Alleged VIP Privileges During Chapter 11

FTX, the cryptocurrency exchange that filed for Chapter 11 bankruptcy last November, has initiated a lawsuit against Bybit Fintech Ltd. and its affiliated entities, including Mirana Corp. and Time Research Ltd., seeking to recover cash and digital assets valued at approximately $953 million.

The complaint alleges that Mirana Corp., Bybit’s investment arm, enjoyed special “VIP” benefits, unavailable to most FTX customers, which it exploited to withdraw a significant portion of its assets from the platform just before the exchange’s collapse.

According to the lawsuit filed in a Delaware court, Mirana took advantage of its privileged status, pressuring FTX employees to expedite its withdrawal requests while ordinary customers experienced prolonged delays.

The legal action aims to reclaim assets, including over $327 million withdrawn by Mirana during the early morning of November 7 to November 8, 2022, when FTX temporarily paused withdrawals.

Bybit Fintech Ltd., Mirana, and Time Research Ltd. are named as defendants, along with specific individuals and Singaporean residents implicated in benefiting from or playing a role in the contested withdrawals.

The bankruptcy lawsuit is FTX’s latest effort, under new management, to recover funds disbursed before its Chapter 11 filing. Chapter 11 provisions grant failing companies the authority to reclaim funds disbursed in the months leading up to bankruptcy to prevent preferential treatment for certain creditors.

FTX, in the lawsuit, indicates its valuation of the withdrawn assets based on November 1 pricing and suggests the possibility of additional pricing information during the litigation’s progression.

The complaint acknowledges potential challenges, such as “subsequent new value” defenses, regarding some of its legal claims.

Bybit and its affiliates have not yet responded to requests for comment, while an FTX spokesperson declined to provide immediate comments on the ongoing legal proceedings.