The entities overseeing the bankruptcy process of crypto platform FTX have filed a lawsuit accusing Mirana Corp, an investment arm Bybit, of receiving a substantial portion of $935 million in transfers just before FTX filed for Chapter 11 bankruptcy. The lawsuit alleges that these transfers were "made with the intent to hinder, delay or defraud FTX.com's present or future creditors."

Bybit's Demand for $20 Million: Adding Complexity to the Dispute

FTX's bankruptcy managers argued that these transfers to Mirana Corp, Time Research, and specific individuals should be classified as fraudulent. Such fraudulent transfers would give FTX a legal basis to seek the return of the full amount of these transfers, along with interest, for the benefit of FTX's bankruptcy estates.

According to the lawsuit, Mirana Corp received assets worth $837,815,847, while Time Research was allocated $47,995,279. The lawsuit noted that FTX's claims against both Mirana and Time Research may be subject, in part, to a 'subsequent new value,' depending on the value of deposits made into these entities' FTX.com accounts after the preferential transfers.

The legal action has not only targeted Bybit's investment arm but also accused the crypto exchange platform of refusing to honor transfer requests on behalf of FTX debtors. Instead, Bybit is alleged to have demanded the release of approximately $20 million that Mirana Corp was unable to withdraw before FTX disabled withdrawals on November 8, 2022.

The lawsuit contended that FTX, through entities it controls, holds assets worth $125 million at Bybit. While there is no dispute over FTX's ownership of these funds, the lawsuit claimed that Bybit is effectively "holding these assets hostage" in an attempt to pressure FTX into bypassing the bankruptcy process.

To ensure the transfer of these funds to the debtors' estate, FTX's bankruptcy managers have stated their intention to "seek judicial enforcement of their rights under the Bankruptcy Code."

FTX Debtors' Lawsuit Seeks Recovery of $935 Million 'Fraudulently' Transferred to Bybit's Investment Arm #crypto #cryptocurrency #cryptoexchanges https://t.co/mP2Om3FOuX

— Bitcoin.com News (@BTCTN) November 13, 2023

Mirana Asset Management in Bybit's Investments

In an earlier report, Finance Magnates wrote, Bybit would temporarily suspend US dollar withdrawals starting on March 10 due to a service outage of its processing partner. Withdrawals via Wire Transfer (including SWIFT) would also be halted at the same time. Users were advised to complete any necessary withdrawals via these methods before the mentioned date.

Bybit, established in 2018 as a crypto derivatives exchange, expanded its services by venturing into the crypto spot trading market in 2021 and introducing options trading in 2022.

Notably, Bybit's recent troubles stemmed from its association with the bankrupt crypto lender, Genesis Global Trading. The exchange's CEO, Ben Zhou, disclosed that Bybit had an exposure of up to $150 million to Genesis through its investment arm, Mirana Asset Management. Out of this exposure, $120 million had collateral and was already liquidated.