“Bybit Abuses VIP Status to Pull Hundreds of Millions During Crypto Collapse, Claims FTX”


John J. Ray III is the current CEO of FTX, taking over in November 2022 after the cryptocurrency exchange collapsed under Sam Bankman-Fried. As part of the bankruptcy proceedings, the FTX bankruptcy estate has filed a lawsuit against Bybit for nearly $1 billion.

Before its bankruptcy, FTX was one of the largest crypto exchanges in the world, with a number of major traders counted among the company’s clients, such as Alameda, the trading arm of FTX led by Bankman-Fried’s one-time girlfriend, Caroline Ellison. Another active trader on FTX was Mirana, the investment arm of Bybit, the sixth-largest cryptocurrency spot exchange.

According to the lawsuit, Mirana’s large account balance on FTX—which was around $850 million in November 2022—granted it special privileges on the platform, including concierge support and increased access to employees. Mirana was able to withdraw nearly $500 million of its digital assets from FTX in the final days before FTX disabled withdrawals. The bankruptcy estate alleges that Bybit has refused to allow FTX to reclaim the $125 million still held in Bybit accounts and has used an “ostensibly independent entity” called BitDAO to devalue tens of millions of dollars of cryptocurrency tokens held by FTX.

Appearing before Congress in December, Ray declared he had never seen such a “complete failure” of corporate control. The estate has launched a number of lawsuits to recover billions in customer funds, including against the parents of Bankman-Fried, and former insiders, including Bankman-Fried, Gary Wang, Nishad Singh, and Ellison. Ray is now seeking to find a buyer to relaunch the failed exchange, with the bidding process reportedly down to three finalists.

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