FTX, led by CEO John J. Ray III, has initiated legal proceedings against ByBit, its investment arm Mirana, and several executives, seeking restitution for funds and digital assets withdrawn by ByBit just before FTX’s collapse. The lawsuit alleges that ByBit leveraged its “VIP” access and connections within FTX to withdraw substantial cash and digital assets from Mirana, Time Research (linked to ByBit), and executives prior to FTX’s downfall.
In the midst of FTX’s withdrawal challenges in November 2022, FTX employees reportedly tracked VIP customers’ withdrawal requests in a spreadsheet labeled “VIP Request – Prioritize (Settlement).” The legal filing contends that FTX’s settlement team made concerted efforts to prioritize Mirana’s withdrawals, resulting in over $327 million transferred to Mirana. The total value of assets withdrawn by ByBit and its executives from FTX is alleged to have reached nearly $1 billion.
The lawsuit further asserts that ByBit imposed restrictions on the FTX estate, limiting asset withdrawals to $125 million on the ByBit exchange. Allegedly, ByBit is using these assets as leverage to recover a remaining balance of $20 million that it could not withdraw from FTX before its collapse.
Additionally, the legal action claims that in October 2021, a ByBit executive privately disclosed to FTX that the company controlled BitDAO (now Mantle), despite presenting BitDAO as a decentralized organization. ByBit purportedly approached the FTX bankruptcy estate in May 2023 to reverse a transaction, even though the value of BIT tokens, approximately $50 million at the time, far exceeded the value of FTT tokens, approximately $4 million. FTX rejected the proposal, prompting BitDAO to rebrand as Mantle and introduce MNT tokens.
As FTX began its conversion, BitDAO allegedly disabled it and held a “community vote” to restrict FTX from converting its tokens. Despite FTX informing ByBit that the action violated the automatic stay in Chapter 11 bankruptcy, the “community vote” passed, with votes seemingly linked to ByBit executives. Notably, Mirana Ventures, a Mirana subsidiary led by David Toh, played a significant role in the vote.
The legal action seeks “compensatory and punitive damages” from ByBit regarding the token scheme and assets held on its platform.