The Allegations Unveiled
The FTX bankruptcy estate, now under the watchful eye of CEO John J. Ray III, has opened a Pandora’s box of legal conflicts by filing a lawsuit against Bybit, its investment arm Mirana, and several top executives. The reason? To recover funds and digital assets valued at nearly $1 billion that were snatched away in the weeks leading to FTX’s dramatic collapse.
The VIP Treatment: Prioritizing Withdrawals
According to the suit, Bybit allegedly took full advantage of its “VIP” status and connections with FTX employees. As withdrawal requests from FTX hit crisis levels in November 2022, FTX staff maintained a special spreadsheet dubbed “VIP Request — Prioritize (Settlement)” to ensure that Mirana’s significant withdrawals were expedited. As a result, a staggering sum of over $327 million reportedly flowed out to Mirana alone, while the total amount withdrawn by Bybit and its executives is now estimated to hover around the $1 billion mark.
Asset Lock and Leverage Games
But wait, there’s more! The lawsuit alleges that Bybit has thrown a wrench into the gears of the FTX estate by enforcing limits on withdrawing assets exceeding $125 million from its exchange. This limitation appears to be Bybit’s attempt to leverage these assets in a bid to secure a remaining balance of $20 million that it couldn’t pull out before FTX went belly up. A classic case of using the lost ship to salvage treasure, it seems.
BitDAO or Governed by Bybit?
In a twist worthy of a soap opera plot, the lawsuit claims that a Bybit executive disclosed back in October 2021 that the company was pulling the strings behind BitDAO, now known as Mantle. This revelation contradicts Bybit’s public stance that BitDAO was a decentralized entity run by the community. Fast forward to May 2023: Bybit, potentially acknowledging the mess, approached the FTX bankruptcy estate to reverse a transaction, despite the BIT tokens being worth significantly more than FTT tokens at the time. Talk about a bold move!
Community Vote or Executive Manipulation?
When FTX rejected this proposal, the plot thickened further. BitDAO swiftly rebranded as Mantle and initiated an asset conversion scheme that FTX was keen on; however, in a stunning turn of events, BitDAO purportedly restricted FTX’s ability to convert its tokens after a so-called “community vote.” Of note, many votes appeared to originate from wallets tied to Bybit executives. The fifth largest vote came from “dtoh.eth,” linked to Mirana Ventures and its leader, David Toh.
The Pursuit of Justice
Now, the lawsuit seeks both compensatory and punitive damages from Bybit over its alleged manipulative tactics regarding the token scheme and the assets held on its platform. The fiery legal drama is heating up, and with nearly $1 billion on the line, the stakes couldn’t be higher. Will justice prevail, or will the crypto wild west saga continue?
