In a legal move, FTX’s bankruptcy advisers have taken Bybit Fintech and its affiliates to court, seeking the recovery of approximately $953 million in cash and digital assets. The lawsuit, filed in a Delaware court, revolves around allegations that Bybit’s investment arm, Mirana Corp., enjoyed exclusive “VIP” benefits, taking advantage of these privileges to withdraw a substantial portion of assets from Sam Bankman-Fried’s FTX exchange just before its Chapter 11 filing a year ago.
VIP Benefits and Alleged Exploitation
The complaint contends that Mirana, enjoying these special privileges, pressured FTX employees to process its withdrawal requests swiftly, leaving regular customers waiting for hours as the exchange faced imminent collapse. The legal action seeks to recover assets, including over $327 million allegedly withdrawn by Mirana between November 7 and November 8, 2022.
Defendants and Chapter 11 Implications
The bankruptcy lawsuit names Bybit Fintech Ltd., Mirana, and affiliated crypto trading firm Time Research Ltd. as defendants. Also, it identifies a senior Mirana executive and Singaporean residents allegedly involved in or benefiting from the FTX withdrawals. Chapter 11 bankruptcy typically allows failed companies to recover funds from the period leading up to the filing, preventing certain creditors from unfair advantages due to pre-filing withdrawals.
FTX’s Vigorous Legal Pursuit
This legal action against Bybit is part of FTX’s broader efforts to recover lost funds. The company, now under new management, has initiated legal proceedings against Kives and his venture capital firm, K5, aiming to recover the estimated $700 million invested by Bankman-Fried. The complaint describes Bankman-Fried as a “profligate patron” who sent millions to Kives, K5 Global, and Baum after attending a social event hosted by Kives in 2022.
Broader Legal Actions by FTX
Beyond Bybit, FTX actively seeks to recover funds disbursed before its Chapter 11 filing. Legal action has been initiated against individuals and entities, including efforts to reclaim funds donated to politicians and charitable organizations. Advisers are investigating the possibility of reclaiming millions paid to celebrities like Shaquille O’Neal and Naomi Osaka for endorsing the platform.
Conclusion
In this complex legal situation, FTX’s pursuit of lost assets unfolds on multiple fronts, underscoring the company’s determination to recover substantial sums and hold responsible parties accountable for their roles in the events leading up to the Chapter 11 filing. As the legal proceedings progress, the cryptocurrency community and stakeholders will keenly watch how this saga unfolds and its potential implications for the broader crypto industry.
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