In an ongoing effort to get well assets to repay creditors affected by its collapse in 2022, defunct crypto exchange FTX, once run by 25-year convict Sam Bankman-Fried, has reached an agreement with UAE-based crypto platform Bybit, allowing it to withdraw assets as a part of a $228 million settlement.
FTX To Recoup Funds From Bybit
In keeping with a report from Bloomberg, the settlement involves FTX dropping its litigation against Bybit Fintech Ltd. and related entities. The corporate has requested approval from the US Bankruptcy Court for the District of Delaware to finalize this agreement, which comes after months of negotiations.
Under the terms of the deal, FTX is about to get well roughly $175 million in digital assets held on Bybit and sell BIT tokens to Bybit’s investment arm, Mirana Corp., for nearly $53 million.
The legal dispute stemmed from allegations that Mirana had withdrawn $327 million in assets from FTX just before the exchange’s collapse, utilizing “special privileges”. At the identical time, other users struggled to access their funds.
As a part of the settlement, defendants who withdrew funds shortly before FTX filed for bankruptcy might be allowed creditor claims amounting to 75% of their account balances on the time of the bankruptcy filing. FTX described this arrangement as generating “significant net savings for the debtors’ estates.”
FTX expressed confidence within the settlement in its filing, stating, “Through the Settlement Agreement, the Debtors might be recovering substantially all the things that they seek to get well.”
The corporate emphasized that this agreement would help secure a major recovery for stakeholders while avoiding “costs and uncertainties” related to ongoing litigation and potential enforcement challenges abroad.
The settlement is one among several agreements orchestrated by FTX’s recent CEO, John J. Ray III, who took the helm following the exchange’s downfall. Earlier this month, the court approved its wind-down plan to distribute no less than $12.6 billion to customers whose assets have been trapped on the platform.
Creditor Payouts Expected By Early 2025
As previously reported by Bitcoinist, Judge John Dorsey from the US Bankruptcy Court has approved the reorganization plan that seeks to initiate creditor repayments nearly two years after FTX’s collapse.
K33 analysts Vetle Lunde and David Zimmerman have projected that creditor payouts may begin within the latter half of Q4 2024 and extend into early Q1 2025. These payouts are expected to occur inside a 60-day window of the court’s effective date, which is anticipated to be announced in mid-November.
Analysts suggest that Bitcoin (BTC) prices may benefit from these developments as funds are released back into the market. Nevertheless, a significant slice of the claims—estimated between $14.4 billion and $16.3 billion—has already been purchased by credit funds, reducing the likelihood of those assets re-entering the market.
Moreover, roughly 33% of the remaining claims are tied to sanctioned entities and individuals without proper know-your-customer (KYC) verification, making those assets unlikely to be reclaimed.
Making an allowance for these aspects, analysts estimate that around 20% to 40% of the remaining $8 billion could potentially re-enter the market. This prediction hinges on the character of FTX’s trader base, which consists largely of “aggressive, crypto-native risk-takers.”
On the time of writing, the exchange’s native token, FTT, is trading at $1.80.
Featured image from DALL-E, chart from TradingView.com