Bybit Faces Legal Battle Over Alleged Fund Misappropriation by FTX Estate

The story of the cryptocurrency company FTX’s bankruptcy takes a fresh turn as the estate steps up its legal defense. According to court documents dated Friday, the FTX estate filed a complaint against Bybit, the exchange platform, claiming to have moved a significant amount of money, $953 million, to its investment arm. This is the most recent development in the case.

The firm Bybit Fintech Ltd., its investment division Mirana, and a number of people, including executive Sean Tan of Mirana, are the particular focus of the Delaware lawsuit. According to the complaint, transfers from FTX.com totaling around $838 million were received by Mirana’s investment unit; of those transfers, almost $500 million were made immediately before to FTX’s November 8, 2022, withdrawal ban.

Additional Transfers and VIP Status Allegations

An additional $115 million in digital and fiat assets are alleged to have been transferred to organizations and persons connected to Bybit and Mirana in the lawsuit. Interestingly, the FTX estate claims that Bybit was a VIP user of the FTX exchange and that Mirana and associates quickly removed funds from their FTX accounts prior to filing for bankruptcy.

The complaint alleges that Mirana reduced the amount of money available for non-VIP clients by using its VIP connections to urge FTX Group staff to accelerate its withdrawal requests. In addition, it is stated that in the days before the withdrawal ban, FTX staff members altered Mirana’s Know-Your-Customer (KYC) settings many times.

Assets that were purportedly transferred “preferentially” or “fraudulently” to Bybit and its affiliates are sought to be returned in the case. Now that they are allegedly being “held hostage,” these assets are at the center of the growing legal battle between Bybit and the FTX estate.

The legal battle between the FTX estate and Bybit highlights the difficulties and complexities in the changing bitcoin exchange market as the drama plays out.