- FTX sued Bybit for nearly $1 billion, alleging Bybit leveraged its VIP status and close ties to take advantage of FTX’s troubles and make large withdrawals
- FTX claims Bybit continues holding over $125 million in FTX assets hostage on its platform as leverage over a separate dispute
- FTX alleges a Bybit executive privately admitted Bybit controls decentralized organization BitDAO/Mantle, which took steps to restrict FTX’s assets after bankruptcy
FTX has filed a lawsuit against Bybit and its affiliates seeking to recover nearly $1 billion in assets withdrawn from FTX in the days before its bankruptcy. FTX alleges Bybit leveraged its VIP status and close ties to take advantage of FTX’s financial troubles.
Bybit’s Mass Withdrawals as FTX Struggled
According to the lawsuit, as FTX struggled to meet customer withdrawals in November 2022, FTX employees tracked VIP withdrawal requests in a spreadsheet. FTX allegedly “went to great lengths” to prioritize Bybit’s withdrawals, resulting in over $327 million transferred to Bybit’s investment arm Mirana.
Bybit Still Holding $125 Million in Hostage
The lawsuit claims Bybit continues to hold over $125 million worth of FTX assets on its platform that the FTX estate has been barred from withdrawing. FTX alleges Bybit is using these assets as leverage to recover $20 million it was unable to withdraw previously.
Allegations of Secret Control Over BitDAO/Mantle
The lawsuit also alleges a Bybit executive privately admitted to FTX that Bybit controlled decentralized organization BitDAO, now known as Mantle. This came amid disputes over a 2021 token swap between FTX’s Alameda and BitDAO.
After FTX’s bankruptcy, BitDAO/Mantle allegedly took steps to restrict FTX’s ability to convert its tokens, which FTX argues violated the automatic stay that takes effect when a company files for bankruptcy. The lawsuit claims Bybit executives aided in passing the proposal to restrict FTX.
Seeking Damages Over Token Scheme and Withheld Assets
The lawsuit is seeking actual and punitive damages from Bybit relating to the alleged token manipulation and Bybit’s withholding of FTX assets on its exchange. Bybit has not yet publicly responded to the lawsuit.
