FTX Trading Ltd. and Bybit Fintech Ltd. have resolved their $228 million dispute, bringing an end to their legal battle. This resolution will enable FTX to recover assets from Bybit’s exchange, with $175 million in digital assets being returned and $53 million in BIT tokens being sold to Mirana Corp., Bybit’s investment arm.
This settlement comes at a significant time for FTX, as the company recently obtained court approval for its bankruptcy plan. The plan allows FTX to repay customers using up to $16.5 billion in assets recovered following its collapse. The success of FTX’s bankruptcy proceedings has been recognized by Judge John Dorsey, who described it as a model case for complex bankruptcy proceedings.
FTX sought approval from the US Bankruptcy Court for the District of Delaware for the settlement with Bybit and others. The agreement will enable the failed crypto exchange to recover a significant amount of funds. The settlement also allows Mirana to claim up to 75% of its account balances prior to the bankruptcy, providing substantial financial support for the debtors’ estates.
By reaching this settlement, FTX expects to recover a substantial portion of the funds it sought, helping stakeholders while avoiding the costs and uncertainties of international litigation. FTX’s CEO, John J. Ray III, is moving ahead with the wind-down plan and has court approval to distribute at least $12.6 billion to customers who have been waiting for their trapped assets.
FTX has also received court approval for its bankruptcy plan, allowing it to start repaying customers. The platform plans to repay 98% of its users with accounts under $50,000 within 60 days once the plan becomes active. This repayment plan prioritizes customers before other competing claims and is based on settlements with customers, creditors, US agencies, and foreign liquidators.
In addition to the customer repayment process, FTX is currently negotiating with the Department of Justice (DOJ) over $1 billion that was seized during the Bankman-Fried prosecution. If successful, this negotiation could result in up to $230 million being returned to FTX shareholders.
With an estimated $14.7 billion to $16.5 billion available for repayment, FTX aims to cover at least 118% of customer account values as of its November 2022 bankruptcy filing. FTX, previously a leading cryptocurrency exchange, faced collapse after it was revealed that Sam Bankman-Fried had used customer funds to cover Alameda Research’s risky investments.