The FTX bankruptcy estate, led by CEO John J. Ray III, filed a lawsuit against ByBit, its investment arm Mirana, and various executives. The goal is to recover the funds and digital assets that ByBit withdrew from FTX just before its collapse, with a current value close to $1 billion.
The suit claims that ByBit used its “VIP” access and connections to FTX staff to withdraw significant cash and digital assets from Mirana, Time Research (another ByBit-related entity), and executives just before the collapse of FTX.
During FTX’s withdrawal difficulties in November 2022, FTX employees tracked withdrawal requests from VIP customers in a spreadsheet titled “VIP Request – Prioritize (Settlement)”. The lawsuit alleges that FTX’s settlement team went to great lengths to prioritize large withdrawals from Mirana, resulting in transfers of more than $327 million to Mirana. The total value of assets withdrawn by ByBit and its executives from FTX has now reportedly reached nearly $1 billion.
The lawsuit claims that ByBit imposed limits on FTX assets, preventing the withdrawal of assets exceeding $125 million on the ByBit exchange. Apparently, ByBit is using these assets as leverage to recoup a remaining balance of $20 million that it was unable to withdraw from FTX before its collapse.
The lawsuit claims that in October 2021, a ByBit executive privately revealed to FTX that the company controlled BitDAO, now known as Mantle, despite presenting BitDAO as a decentralized organization run by community members. Then, in May 2023, ByBit contacted the FTX bankruptcy estate to cancel the 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 dollars at the time.
After FTX rejected the “illogical proposal,” BitDAO quickly rebranded as Mantle, introducing MNT tokens allowing BIT holders to convert at a 1:1 ratio. As FTX began its conversion, BitDAO reportedly deactivated it and held a “community vote” to decide whether to block FTX from converting its tokens.
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According to the lawsuit, FTX informed ByBit that the action violated the automatic stay of Chapter 11 bankruptcy. Despite this, the “community vote” was adopted, with the votes apparently linked to ByBit executives. Notably, the fifth largest vote came from the “dtoh.eth” wallet, identified as Mirana Ventures, a subsidiary of Mirana led by David Toh.
The lawsuit seeks “compensatory and punitive damages” from ByBit regarding the token system and assets held on its platform.
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