Bankrupt exchange FTX sues Bybit crypto exchange, Here is why?
To recover some funds, the FTX bankruptcy team sued Bybit & two other affiliates.
FTX was a top-ranked crypto exchange by 24-hour trade volume, until Nov 2022. Following a report by the Coindesk media, people came to know about the real financial position of the FTX exchange. Under the panic situation, all the FTX customers tried to withdraw their funds from this platform but the exchange suspended withdrawal services & filed for bankruptcy under the Chapter 11 code in a US bankruptcy court along with 120+ subsidiaries.
On 11 Nov 2023, Bloomberg reported that FTX bankruptcy advisors sued popular crypto exchange Bybit’s investment arm Mirana.
According to the suit, Mirana’s large account balance on the FTX exchange was taking special privileges on the platform relative to average FTX customers, including concierge support and increased access to employees.
Reportedly Mirana was trading crypto with $850 million in November 2022 and withdrew funds from the platform with top priority following the FTX bankruptcy reports.
The lawsuit filed in the Delaware bankruptcy court noted that Mirana & its affiliates grabbed top priority to withdraw funds, while they ditched other average customers.
Just before the FTX withdrawal disable plan, Mirana was able to withdraw only $500 million. Reportedly Bybit has refused to allow FTX to reclaim the $125 million still held in Bybit accounts and has used an “ostensibly independent entity” called BitDAO to devalue tens of millions of dollars of cryptocurrency tokens held by FTX.
Bybit & FTX’s sister firm Alameda Research had been in an agreement since Oct 2021 for token swap services for which Alameda received 100 million tokens native to the BitDAO project in exchange for around 3.4 million of FTX’s native tokens.
To claim the rest of the $125 million funds, Bybit misused its power via an easy token rebranding structure and successfully secured $100 million against FTX’s power.
With the help of this lawsuit action, the FTX bankruptcy team wants $953 million worth of funds from the Bybit exchange.
So far no official statement has come from the Bybit exchange and it will be interesting to see how the Bybit team will tackle this lawsuit because both of the parties used their proper right to save their funds.
At the present time, there are a total of three bidders willing to acquire FTX and reboot its services under a new brand name with totally different leadership.
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