The bankruptcy estate of defunct FTX has filed a charge against cryptocurrency exchange Bybit in a bid to recall the hundreds of millions of dollars that the latter had siphoned in a fraudulent scheme. According to the current market value, the assets that were withdrawn by Bybit from FTX on the eve of its collapse are now valued at approximately $1 billion.
FTX CEO Plans to Claw Back Funds
Apart from Bybit, other defendants in the lawsuit include its investment arm Mirana, and some of its top executives. Precisely, the said assets were withdrawn from their accounts just before FTX imploded.
Since FTX collapsed under the leadership of Sam Bankman-Fried who resigned a few days after, the new administration led by John Ray III has continued to push for recovery of most of the assets donated to different entities including insiders, customers, and political groups.
Bybit Exploit VIP Access to Withdraw Funds
In the lawsuit, Bybit was accused of exploiting its close relationship with some FTX staff as well as its VIP status to carry out the transaction.
Amidst the struggle to meet up with withdrawals in November 2022, VIP customer requests were tracked by FTX employees in a spreadsheet titled “VIP Request – Prioritize (Settlement).” Mirana was one of the top active traders on FTX and was therefore treated with utmost urgency.
Much effort was put into prioritizing Mirana’s withdrawal which was quite large at the time. In the end, the transfers made to Mirana were running above $327 million and in total, the value of the assets withdrawn by Bybit and its executives had now grown to $1 billion.
Former FTX CEO Offers Preferential Treatment
It is worth noting that such a case of preferential treatment is at the center of the fraud charges brought against FTX by the United States Department of Justice. The Bankman-Fried-led FTX redirected its customer’s deposits to Alameda Research, the sister trading firm of FTX which was led by SBF’s lover Caroline Ellison at the time.
There are claims that Alameda used these funds for its own personal affairs including the purchase of real estate properties and some venture investments. Bankman-Fried appeared in court last month for his criminal trial and was finally found guilty after he had earlier pleaded not guilty.