Bankrupt cryptocurrency exchange FTX has reached a significant milestone in its bankruptcy proceedings by settling a year-long lawsuit against Bybit for over $225 million.
This settlement represents a crucial step in FTX’s efforts to recover assets following its abrupt collapse in 2022.
FTX and Bybit Resolve Legal Dispute for Over $225 Million
In a court filing dated October 24, FTX announced it has agreed to dismiss its lawsuit against Bybit Fintech Ltd. and its affiliates as part of the $225 million settlement. This agreement allows FTX to recover up to $175 million in assets from Bybit. Additionally, it enables the sale of BIT tokens to Mirana, Bybit’s investment arm, for over $50 million.
According to FTX, this agreement allows them to recover nearly all of the value of their on-exchange assets based on the projected outcomes under the confirmed Chapter 11 Plan. Thus, this settlement is likely to provide more value to FTX’s estate than continued litigation.
“The Settlement Agreement also allows the Debtors to secure this significant recovery for their stakeholders while avoiding the expense, uncertainty, and burden of continued litigation and any potential risks associated with enforcing any judgment abroad,” FTX stated.
Read more: FTX Collapse Explained: How Sam Bankman-Fried’s Empire Fell
The lawsuit initiated nearly a year ago, alleged that Mirana misused VIP privileges to withdraw $327 million from FTX while other customers faced withdrawal restrictions.
Still, the settlement awaits approval from U.S. Bankruptcy Judge John Dorsey, with a hearing set for November 20, 2024. If approved, this agreement will not only provide substantial savings but will also contribute meaningfully to recovering assets for FTX’s estate.
Meanwhile, this development arrives as FTX has shown substantial progress in its bankruptcy process. Earlier this month, the firm received court approval for its asset redistribution plan, which aims to return over $12.6 billion to customers who held assets on the exchange when it collapsed.
Read more: Who Is John J. Ray III, FTX’s New CEO?
Notably, several former FTX executives have faced criminal sentencing. Former CEO Sam Bankman-Fried received a 25-year sentence, Caroline Ellison was sentenced to two years, and Ryan Salame was sentenced to seven years for their involvement in FTX’s downfall
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