Sunday, July 21, 2024

In a recent legal development, the overseers of the FTX bankruptcy have initiated a lawsuit aiming to recoup $935 million. This sum was allegedly moved to the investment division of Bybit and various other entities shortly before FTX’s declaration of bankruptcy under Chapter 11 in November 2022. The suit further claims that Bybit employed assets held on its platform, which belonged to FTX, as a bargaining chip in its demand for a transfer of about $20 million.

Allegations of Fraudulent Transfers to Mirana Corp by FTX Debtors

In the lawsuit, the administrators handling the FTX bankruptcy accuse Mirana Corp, an investment subsidiary of the cryptocurrency platform Bybit, of inappropriately receiving a significant portion of the $935 million transferred just prior to FTX’s Chapter 11 filing. The lawsuit contends that these transfers to Mirana Corp were executed with the intention of obstructing, delaying, or defrauding the creditors of

FTX’s bankruptcy team alleges that the series of transactions made to Mirana Corp, Time Research, and certain individuals are legally contestable as fraudulent under Section 548(a)(1)(A) of the Bankruptcy Code. This provision enables FTX to pursue the recovery of the entire sum transferred, plus interest, for the benefit of the bankruptcy estates of the debtors.

The lawsuit documents reveal that Mirana Corp allegedly received assets totaling $837,815,847, while Time Research was the recipient of $47,995,279. It also mentions that the claims against both Mirana and Time Research may partly depend on a ‘subsequent new value’, which hinges on the deposits made into their accounts after the initial preferential transactions.

Bybit Accused of Holding FTX Assets Hostage

Furthermore, the lawsuit accuses Bybit of not complying with the transfer requests from FTX debtors. Instead, Bybit reportedly insisted on releasing around $20 million that Mirana Corp was unable to withdraw before FTX halted withdrawals on November 8, 2022.

According to the lawsuit, FTX’s bankruptcy managers maintain that Bybit is in possession of FTX-controlled assets valued at $125 million. Although there’s no contention regarding FTX’s ownership of these funds, the lawsuit alleges that Bybit continues to withhold these assets in an attempt to force FTX to bypass the bankruptcy proceedings.

Consequently, FTX’s bankruptcy administrators are seeking legal enforcement of their rights under the Bankruptcy Code to ensure the transfer of these funds to the debtor’s estate.

We welcome your perspectives on this unfolding story in the comments section below.

Frequently Asked Questions (FAQs) about FTX bankruptcy lawsuit

What is the FTX bankruptcy lawsuit about?

The FTX bankruptcy lawsuit seeks to recover $935 million, alleging that these funds were fraudulently transferred to Bybit’s investment arm, Mirana Corp, and others just before FTX’s Chapter 11 bankruptcy filing in November 2022. The lawsuit accuses Bybit of using FTX assets as leverage and holding them hostage to extract funds.

Who are the main parties involved in the FTX lawsuit?

The main parties involved are the entities managing the bankruptcy of FTX, who are the plaintiffs, and Mirana Corp (Bybit’s investment arm), Time Research, and certain individuals, who are the defendants. Bybit is also implicated in the lawsuit for its alleged role in holding FTX assets.

What are the specific allegations made in the lawsuit?

The lawsuit alleges that transfers of $935 million to Mirana Corp and others were made with the intent to hinder, delay, or defraud FTX’s creditors. It also accuses Bybit of refusing to honor transfer requests and instead using FTX’s assets on its platform as a form of leverage.

What does the lawsuit seek to achieve?

The lawsuit aims to reclaim the full amount of the alleged fraudulent transfers, along with interest, for the benefit of the debtors’ bankruptcy estates. It also seeks judicial enforcement of the rights under the Bankruptcy Code to ensure the transfer of FTX assets held by Bybit to the debtors’ estate.

What is the significance of ‘subsequent new value’ mentioned in the lawsuit?

‘Subsequent new value’ refers to the potential adjustment of claims against Mirana and Time Research, based on the value of deposits made into their accounts after the preferential transfers. This could affect the total amount that can be recovered in the lawsuit.

More about FTX bankruptcy lawsuit

  • FTX Bankruptcy Overview
  • Details on Bybit and Mirana Corp Allegations
  • Legal Implications of FTX Lawsuit
  • Analysis of Fraudulent Transfer Claims in FTX Case
  • Understanding Bankruptcy Code Section 548(a)(1)(A)
  • FTX and Bybit Asset Holding Dispute
  • The Role of ‘Subsequent New Value’ in Bankruptcy Claims


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CryptoJen November 13, 2023 - 8:39 pm

wow, this FTX case is gettin messier by the day. Can’t believe how much money’s involved here! #cryptodrama

FinanceGuru101 November 14, 2023 - 2:12 am

honestly, seeing Bybit in this light is troubling… Were they really holding assets hostage? That’s a big claim.

MarketWatcher November 14, 2023 - 3:21 am

The whole ‘subsequent new value’ thing is kinda confusing, anyone got a simple explanation?

SkepticalSam November 14, 2023 - 5:02 am

Are we sure this isn’t just FTX trying to scapegoat others for their own mismanagement? gotta see both sides…

LegalEagle November 14, 2023 - 8:04 am

If these allegations are true, it’s a major breach of trust in the crypto world. FTX’s fall continues to shock me.

BankruptcyExpert November 14, 2023 - 5:12 pm

Section 548(a)(1)(A) is crucial here, if FTX proves fraudulent transfer, it could be a game changer for the case.


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