The FTX bankruptcy estate, under the leadership of CEO John J. Ray III, has filed a lawsuit against Bybit, its investment arm Mirana, and various executives. The lawsuit aims to recover funds and digital assets amounting to close to $1 billion that Bybit allegedly withdrew from FTX just before its collapse.
Alleged VIP Access Exploitation
The suit alleges that Bybit leveraged its “VIP” access and connections within FTX staff to withdraw substantial cash and digital assets from Mirana, Time Research (another entity linked to Bybit), and executives just before FTX’s collapse.
During the withdrawal difficulties faced by FTX in November 2022, FTX employees reportedly tracked VIP customers’ withdrawal requests in a spreadsheet labeled “VIP Request — Prioritize (Settlement).” The lawsuit claims that FTX’s settlement team went to great lengths to prioritize Mirana’s withdrawals, resulting in over $327 million in transfers to Mirana.
The total value of assets withdrawn by Bybit and its executives from FTX is now reported to be nearly $1 billion.
Bybit’s Imposed Limitations, Deceptive Practices Unveiled
The lawsuit further alleges that Bybit has imposed limitations on the FTX estate, restricting the withdrawal of assets exceeding $125 million on the Bybit exchange. Bybit is purportedly using these assets as leverage to seek recovery for a remaining balance of $20 million that it could not withdraw from FTX before its collapse.
In October 2021, a Bybit executive allegedly privately revealed to FTX that the company controlled BitDAO, later known as Mantle, despite presenting BitDAO as a decentralized organization run by community members.
In May 2023, Bybit approached the FTX bankruptcy estate with a proposal to reverse a transaction, even though the value of the BIT tokens, approximately $50 million at the time, far exceeded the value of the FTT tokens, approximately $4 million at the time.
Unsuccessful Rebranding Attempt
FTX rejected the “illogical proposal,” leading BitDAO to swiftly rebrand as Mantle. The rebrand introduced MNT tokens for BIT holders to convert at a 1:1 ratio. However, as FTX began its conversion, BitDAO allegedly disabled it and held a “community vote” to decide on restricting FTX from converting its tokens.
According to the lawsuit, FTX informed Bybit that the action violated the automatic stay in Chapter 11 bankruptcy. Despite this, the “community vote” passed, with votes seemingly linked to Bybit executives. The fifth-largest vote came from the wallet “dtoh.eth,” identified as Mirana Ventures, a Mirana subsidiary led by David Toh.