A lawsuit has been launched against ByBit, its investment arm Mirana, and several executives by the FTX bankruptcy estate, which is led by CEO John J. Ray III.The goal is to retrieve money and digital assets that ByBit removed from FTX just before it collapsed; these assets are estimated to be worth $1 billion at this point.
According to the lawsuit, ByBit took large amounts of money and digital assets from executives at FTX, Time Research, a company connected to ByBit, and Mirana just before the company collapsed. It did this by using its “VIP” access and connections with FTX employees.Employees of FTX kept note of VIP customers’ withdrawal requests in a spreadsheet called “VIP Request – Prioritize (Settlement)” during the withdrawal issues that occurred in November 2022.According to the lawsuit, FTX’s settlement team made a considerable deal of effort to give priority to Mirana’s large withdrawals, which led to transfers of more than $327 million to Mirana.According to reports, ByBit and its executives withdrew assets worth around $1 billion from FTX in total.
The lawsuit alleges that in order to prevent the FTX estate from withdrawing assets valued at more than $125 million from the ByBit exchange, ByBit placed restrictions on it.It is said that ByBit is attempting to retrieve $20 million that it was unable to take from FTX before to its collapse by utilizing these assets as leverage.Despite portraying BitDAO as a decentralized organization administered by community members, the lawsuit alleges that in October 2021, a ByBit executive secretly disclosed to FTX that the business controls BitDAO, now known as Mantle.Then, in May 2023, ByBit made contact with the FTX bankruptcy estate on the possibility of reversing the transaction, despite the fact that the FTT tokens’ worth of about $4 million was far smaller than the value of the BIT tokens, which at the time were valued at over $50 million.
Following FTX’s rejection of the “illogical proposal,” BitDAO quickly changed its name to Mantle and introduced MNT tokens, which BIT holders could convert at a 1:1 ratio.BitDAO apparently stopped FTX from converting as soon as it started, and then conducted a “community vote” to determine whether or not to prevent FTX from converting its tokens.
A notice of violation of the automatic stay in Chapter 11 bankruptcy was sent to ByBit by FTX, according to the lawsuit.With votes that appeared to be connected to ByBit officials, the “community vote” nevertheless went through.The wallet “dtoh.eth,” which was identified as Mirana Ventures, a Mirana subsidiary run by David Toh, is noteworthy for having cast the fifth-largest vote.The lawsuit targets ByBit with regards to the token program and the assets stored on its network, seeking “compensatory and punitive damages.”