FTX Bankruptcy Update- FTX Settles $228 Million Lawsuit with Bybit
FTX Bankruptcy Update– In a significant development, FTX has reached a settlement to drop its lawsuit against Bybit, its executives, and investment arm Mirana. This agreement will enable the beleaguered cryptocurrency exchange to reclaim approximately $228 million, which is crucial for repaying its creditors in the coming months.
Details of the Settlement
According to FTX’s bankruptcy court filing submitted last Thursday, the settlement reflects the culmination of extensive negotiations between the parties involved. FTX noted, Over the past months, the parties have engaged in lengthy, good faith negotiations regarding these claims, and ultimately reached a global settlement reflected in the Settlement Agreement.
This settlement allows FTX’s liquidation estate to recover $175 million in cryptocurrencies currently held in Bybit accounts. Additionally, FTX will sell over 105 million BIT tokens from Mirana, valued at around $52.7 million.
Impact on Creditors
The settlement also includes provisions for defendants who withdrew their funds from FTX prior to its bankruptcy. They will still be permitted to claim back 75% of their account balances as of the petition date. FTX expressed confidence in the settlement, stating, Through the Settlement Agreement, the Debtors will be recovering substantially everything that they seek to recover.
FTX’s Reorganization Progress
FTX’s bankruptcy estate initiated legal action against Bybit in November, alleging misuse of VIP access to withdraw vast amounts of cash and digital assets just before FTX’s collapse in 2022. The company also claimed that Bybit was restricting access to other assets, effectively holding them hostage.
Recently, FTX, under the guidance of bankruptcy expert John J. Ray III, announced that over 94% of its creditors voted in favor of the reorganization plan. Shortly after, the District of Delaware Bankruptcy Court approved this plan, aiming to repay 98% of creditors at least 118% of their claims in cash.
FAQs
What is the total amount FTX will recover from Bybit in the settlement?
FTX will recover approximately $228 million from Bybit as part of the settlement agreement. This includes $175 million in cryptocurrencies held on Bybit accounts and the sale of over 105 million BIT tokens valued at around $52.7 million.
How does the Bybit settlement affect FTX’s creditors?
The settlement is expected to significantly benefit FTX’s creditors by enabling the exchange to repay them. FTX plans to return at least 118% of the creditors’ claims in cash, following the approval of its reorganization plan by the District of Delaware Bankruptcy Court. Additionally, defendants who withdrew funds before FTX’s bankruptcy can still reclaim 75% of their account balances as of the petition date.
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