FTX has initiated a billion-dollar lawsuit against Bybit, including its investment arm Mirana and several executives, seeking both compensatory and punitive damages related to a token scheme and assets held on the Bybit platform.
The lawsuit, led by FTX's bankruptcy estate under CEO John J. Ray III, aims to recover funds and digital assets that Bybit allegedly withdrew from FTX just before its collapse, currently estimated to be close to $1 billion.
According to the suit, Bybit leveraged its "VIP" access and connections with FTX staff to withdraw substantial cash and digital assets from Mirana, Time Research (another entity associated with Bybit), and executives shortly before FTX's collapse in November 2022. FTX employees reportedly tracked VIP customers' withdrawal requests in a spreadsheet labeled "VIP Request — Prioritize (Settlement)," with FTX's settlement team prioritizing Mirana's withdrawals, totaling over $327 million.
Bybit is accused of imposing restrictions on the FTX estate, limiting withdrawals to $125 million on the Bybit exchange and using these assets as leverage to recover a remaining balance of $20 million that it allegedly could not withdraw from FTX before its collapse.
The lawsuit also claims that in October 2021, a Bybit executive privately disclosed to FTX that the company controlled BitDAO (now Mantle), despite presenting BitDAO as a decentralized organization. In May 2023, Bybit reportedly approached the FTX bankruptcy estate with a proposal to reverse a transaction, which FTX rejected. Subsequently, BitDAO rebranded as Mantle, introducing MNT tokens for BIT holders to convert at a 1:1 ratio. Bybit is accused of orchestrating a "community vote" to restrict FTX from converting its tokens, violating the automatic stay in Chapter 11 bankruptcy.
Despite FTX's objections, the "community vote" allegedly passed, with votes linked to Bybit executives, including Mirana Ventures, a Mirana subsidiary led by David Toh. The legal action seeks compensatory and punitive damages related to the token scheme and assets held on Bybit's platform.
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