{"id":14047,"date":"2023-11-13T07:55:50","date_gmt":"2023-11-13T07:55:50","guid":{"rendered":"https:\/\/cryptoheretostay.com\/?p=14047"},"modified":"2023-11-13T07:55:52","modified_gmt":"2023-11-13T07:55:52","slug":"ftx-lawsuit-alleges-bybit-used-vip-privileges-to-withdraw-953m-before-collapse","status":"publish","type":"post","link":"https:\/\/cryptoheretostay.com\/?p=14047","title":{"rendered":"FTX lawsuit alleges Bybit used \u201cVIP\u201d privileges to withdraw $953M before collapse"},"content":{"rendered":"<script type=\"text\/javascript\">\r\namzn_assoc_placement = \"adunit0\";\r\namzn_assoc_tracking_id = \"totafreearti-20\";\r\namzn_assoc_ad_mode = \"search\";\r\namzn_assoc_ad_type = \"smart\";\r\namzn_assoc_marketplace = \"amazon\";\r\namzn_assoc_region = \"US\";\r\namzn_assoc_default_search_phrase = \"crypto\";\r\namzn_assoc_default_category = \"All\";\r\namzn_assoc_search_bar = \"false\";\r\namzn_assoc_title = \"\";\r\namzn_assoc_rows =\"1\";\r\n<\/script>\r\n<script src=\"\/\/z-na.amazon-adsystem.com\/widgets\/onejs?MarketPlace=US\"><\/script>\n<p data-component=\"paragraph\">FTX and Alameda bankruptcy advisers made allegations of fraud against crypto exchange Bybit, its two corporate affiliates, and four senior executives, in a lawsuit filed on Nov. 10. The lawsuit alleged that the defendants used a \u201cfraudulent scheme\u201d to withdraw cash and assets from the FTX platform, right before it collapsed.<\/p>\n<p data-component=\"paragraph\">FTX is looking to recover $953.2 million that was fraudulently withdrawn by the defendants in the 90 days preceding the bankruptcy. The lawsuit named Mirana, Bybit\u2019s investment arm, and Time Research, a crypto trading firm affiliated with Mirana, as the two corporate defendants besides Bybit.<\/p>\n<p data-component=\"paragraph\">Under Chapter 11, FTX has the right to recover funds paid out in the 90 days before the bankruptcy filing. The law is meant to stop certain creditors from a windfall just because they managed to get their money out where others failed.<\/p>\n<h2 data-component=\"paragraph\">Mirana allegedly used its VIP Status to prioritize withdrawals<\/h2>\n<p data-component=\"paragraph\">As per the lawsuit, Mirana was an active trader on the FTX platform with an account balance of \u201cseveral hundred million dollars.\u201d Mirana\u2019s trading activity and its affiliation with Bybit earned it \u201cpreferential treatment\u201d compared to the average customer, the lawsuit notes.<\/p>\n<p data-component=\"paragraph\">Mirana was assigned the \u201cVIP\u201d status, giving it access to FTX Group employees and concierge support. When concerns about FTX\u2019s financial health arose, Mirana used its privileges to prioritize its withdrawal requests as individual FTX customers struggled. The lawsuit states:<\/p>\n<p data-component=\"paragraph\">\u201cMirana leveraged its VIP connections to pressure FTX Group employees to fulfil its withdrawal requests as soon as assets became available, further reducing the funds available to meet withdrawal requests by FTX.com\u2019s non-VIP customers.\u201d<\/p>\n<p data-component=\"paragraph\">As a result of the pressure from Mirana, FTX employees \u201crepeatedly changed\u201d Mirana\u2019s settings in FTX\u2019s know-your-customer (KYC) system before withdrawals were frozen, the lawsuit notes.<\/p>\n<h2 data-component=\"paragraph\">Bybit allegedly used its control of FTX assets as leverage<\/h2>\n<p data-component=\"paragraph\">After FTX halted customer withdrawals on Nov. 8, 2022, Bybit used FTX\u2019s assets on the Bybit platform to force FTX to release Mirana\u2019s account balance, the lawsuit alleges. It states:<\/p>\n<p data-component=\"paragraph\">\u201c\u2026Bybit seized FTX Group assets held on Bybit\u2019s exchange, refusing to release them unless and until Mirana was able to finish withdrawing the entire balance of its FTX.com account.\u201d<\/p>\n<h2 class=\"Paragraph_text-SqIsdNjh0t0-\" data-component=\"paragraph\">\u201cRepeated unlawful efforts\u201d<\/h2>\n<p class=\"Paragraph_text-SqIsdNjh0t0- paywall\" data-component=\"paragraph\">FTX bankruptcy advisers alleged that even after the Chapter 11 filing, Bybit and its affiliates \u201ccontinued their unlawful efforts\u201d to prioritize themselves over other FTX creditors. The lawsuit notes that the defendants \u201crepeatedly violated the automatic global stay\u201d on FTX properties.<\/p>\n<p data-component=\"paragraph\">Firstly, Bybit holds over $125 million of FTX\u2019s assets hostage. Bybit has \u201cinsisted\u201d that it will only allow FTX to withdraw the funds after it transfers around $20 million to Mirana, representing Mirana\u2019s FTX balance when it collapsed.<\/p>\n<p data-component=\"paragraph\">Secondly, Mirana and Bybit have allegedly tried to restrict and devalue \u201ctens of millions of dollars of cryptocurrency tokens\u201d held by FTX.<\/p>\n<p data-component=\"paragraph\">The lawsuit against Bybit is the latest attempt by FTX\u2019s new management to claw back funds paid out before the bankruptcy filing.<\/p>\n<p><script type=\"text\/javascript\">\r\namzn_assoc_placement = \"adunit0\";\r\namzn_assoc_tracking_id = \"totafreearti-20\";\r\namzn_assoc_ad_mode = \"search\";\r\namzn_assoc_ad_type = \"smart\";\r\namzn_assoc_marketplace = \"amazon\";\r\namzn_assoc_region = \"US\";\r\namzn_assoc_default_search_phrase = \"bitcoin\";\r\namzn_assoc_default_category = \"All\";\r\namzn_assoc_search_bar = \"false\";\r\namzn_assoc_title = \"\";\r\namzn_assoc_rows =\"1\";\r\n<\/script>\r\n<script src=\"\/\/z-na.amazon-adsystem.com\/widgets\/onejs?MarketPlace=US\"><\/script><br \/>\n<br \/><a href=\"https:\/\/cryptoslate.com\/ftx-lawsuit-alleges-bybit-used-vip-privileges-to-withdraw-953m-before-collapse\/\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>FTX and Alameda bankruptcy advisers made allegations of fraud against crypto exchange Bybit, its two corporate affiliates, and four senior executives, in a lawsuit filed on Nov. 10. The lawsuit alleged that the defendants used a \u201cfraudulent scheme\u201d to withdraw cash and assets from the FTX platform, right before it collapsed. FTX is looking to [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":14048,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_wp_rev_ctl_limit":""},"categories":[3],"tags":[],"class_list":["post-14047","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-ethereum-news"],"_links":{"self":[{"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/posts\/14047","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=14047"}],"version-history":[{"count":1,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/posts\/14047\/revisions"}],"predecessor-version":[{"id":14049,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/posts\/14047\/revisions\/14049"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/media\/14048"}],"wp:attachment":[{"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=14047"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=14047"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=14047"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}