FTXIn the midst of its own bankruptcy, FTX is suing cryptocurrency exchange ByBit to reclaim funds that the latter withdrew using “special privileges” while FTX failed. On the other hand, the native token of the insolvent exchange experienced one of the greatest single-day increases this year, with the FTT price increasing by about 100%.
FTX Launches Legal Battle Against Bybit
Bankruptcy advisors at crypto exchange FTX have sued Bybit Fintech Ltd. in an attempt to recover $953 million in digital assets and cash. According to the advisers, ByBit took the funds just before FTX filed for Chapter 11 bankruptcy in November.
In general, Chapter 11 enables failed businesses to reclaim funds in the months preceding their bankruptcy filing. This authority is intended to prevent certain creditors from receiving an unexpected payment simply because they were able to recover their money while others were unable to do so.
The action, filed on Friday, November 10, in a Delaware court, claims that Bybit’s investment subsidiary, Mirana Corp., received privileged “VIP” benefits not available to regular FTX customers. Mirana is accused of abusing these advantages in order to offload the majority of its assets from FTX before the platform’s demise in November 2022.
According to the complaint, Mirana put pressure on FTX workers to expedite its withdrawal requests, while regular FTX clients encountered delays. The lawsuit seeks to recoup assets worth $953 million, including over $327 million allegedly removed by Mirana during the period when the crypto exchange halted withdrawals on November 8, 2022.
Bybit Fintech Ltd., Mirana, and a linked crypto trading business called Time Research Ltd. are named in the bankruptcy complaint. A top Mirana official from that time period is also named as a defendant, as are Singaporean residents who, according to the complaint, either benefited from or played a role in the FTX withdrawals that are being investigated.
According to Bloomberg, Miranda put pressure on FTX employees to process their withdrawal requests faster than other FTX clients, who had to wait hours to get their money back from the exchange. In fact, Miranda Corp withdrew almost $327 million of the $953 million after FTX banned withdrawals on the exchange.
What does this lawsuit mean for crypto investors?
As it stands, ByBit has yet to respond to the lawsuit and the claims made by FTX. The legal case filed by FTX against Bybit is the most recent lawsuit undertaken by the crypto exchange’s new management to recover funds disbursed prior to the company filing for Chapter 11 bankruptcy in November 2022.
FTX claimed in the lawsuit that it assessed the assets taken from its exchange by Bybit and its affiliates based on November 1 pricing. FTX also stated that it may improve price information as the legal proceedings advance. The complaint also stated that certain legal claims it makes could potentially be vulnerable to defenses based on “subsequent new value.”
Currently, crypto exchange FTX is seeking to revive the exchange, with NYSE’s ex-president showing considerable interest. If the exchange is successful in recovering ByBit cash, it will have significant financial backing to reopen the exchange. In addition, the exchange has started selling its Solana tokens in order to raise funds.
Since the start of 2023, the FTT price has exhibited the most significant 24-hour increase of any asset on the top 50 cryptocurrency rankings, 97%. Including the increase from the previous day, the surge contributed to a cumulative gain of 240% over the course of two days.
Amidst the course of intraday trading, the alternative coin also managed to surpass a significant obstacle identified at $4.55 prior to retreating below it. Reclaiming this level as a support line might lend the altcoin a little assistance in consolidating its recent ascent.
As reported by Cryptopolitan, the rally may not endure due to the fact that it is a consequence of SEC Chair Gary Gensler’s remarks and not a result of fundamental progress. This could result in a drawdown, which would erase recent gains and reduce the price of FTT to $3.00 or $2.42. A breach of the final level would render the bullish thesis invalid.
