In a shocking turn of events, a lawsuit filed by FTX and Alameda bankruptcy advisers alleges that Bybit, a prominent cryptocurrency exchange, used its “VIP” privileges to withdraw a staggering $953 million just before its collapse. Learn more about this crypto controversy and its implications on Todaycryptoprices.com
In a recent legal battle that has sent shockwaves through the cryptocurrency world, FTX and Alameda bankruptcy advisers have made startling allegations against Bybit, a prominent crypto exchange, and its top executives. On November 10, a lawsuit was filed accusing the defendants of employing a “fraudulent scheme” to withdraw cash and assets from the FTX platform just before its unfortunate collapse.
FTX’s Quest for Justice
FTX, a leading crypto exchange, is seeking to recover a staggering $953.2 million that was allegedly fraudulently withdrawn by Bybit and its associates in the 90 days leading up to FTX’s bankruptcy. This lawsuit names two corporate affiliates, Mirana and Time Research, along with four senior executives of Bybit.
Under Chapter 11 bankruptcy proceedings, FTX has the right to recover funds that were paid out in the 90 days before the bankruptcy filing. This legal provision aims to prevent certain creditors from benefiting disproportionately simply because they managed to withdraw their funds before others.
Mirana’s Alleged VIP Manipulation
The lawsuit alleges that Mirana, with an account balance of “several hundred million dollars,” was an active trader on the FTX platform. Mirana’s significant trading activity, coupled with its affiliation with Bybit, supposedly granted it “preferential treatment” compared to ordinary customers.
Mirana was granted the coveted “VIP” status, which provided it with direct access to FTX Group employees and concierge support. As concerns grew about FTX’s financial stability, Mirana allegedly leveraged its VIP status to prioritize its withdrawal requests, effectively putting pressure on FTX Group employees to expedite the process. This, in turn, reduced the funds available for non-VIP customers of FTX.com.
In a startling revelation, the lawsuit claims that FTX employees “repeatedly changed” Mirana’s settings in FTX’s know-your-customer (KYC) system just before customer withdrawals were frozen.
Bybit’s Alleged Asset Leverage
Following FTX’s suspension of customer withdrawals on November 8, 2022, Bybit is accused of using FTX’s assets on its platform as leverage to coerce FTX into releasing Mirana’s account balance. Bybit’s actions are described as follows:
“…Bybit seized FTX Group assets held on Bybit’s exchange, refusing to release them unless and until Mirana was able to finish withdrawing the entire balance of its FTX.com account.”
Continued Unlawful Efforts
Even after the Chapter 11 filing, FTX bankruptcy advisers allege that Bybit and its affiliates persisted in prioritizing their interests over other FTX creditors. The lawsuit asserts that the defendants “repeatedly violated the automatic global stay” on FTX properties.
Firstly, Bybit is holding over $125 million of FTX’s assets hostage, insisting on allowing FTX to withdraw the funds only after transferring approximately $20 million to Mirana, which represents Mirana’s FTX balance at the time of the collapse.
Secondly, Mirana and Bybit are accused of attempting to restrict and devalue “tens of millions of dollars of cryptocurrency tokens” held by FTX.
FTX’s Battle for Recovery
This lawsuit against Bybit represents FTX’s latest effort to recover the funds paid out in the lead-up to its bankruptcy filing. The outcome of this legal battle is poised to have significant implications for the cryptocurrency industry and its regulatory framework.
In conclusion, the cryptocurrency world is watching closely as FTX takes legal action against Bybit and its affiliates in an effort to recover substantial funds that have raised concerns about the integrity of the crypto market.
FTX’s lawsuit alleges Bybit’s VIP privileges led to $953M withdrawal, raising concerns about crypto exchange safety and regulatory scrutiny.
Is Bybit Safe After FTX?
The recent allegations against Bybit, as detailed in the lawsuit, have raised questions about the safety and security of the exchange. Investors and users of Bybit may have concerns about the platform’s safety in light of these accusations. It’s essential for individuals to conduct thorough research and consider the ongoing legal proceedings when evaluating the safety of using Bybit.
Is Bybit Risky?
The allegations of fraudulent activity and manipulation in the lawsuit certainly raise concerns about the level of risk associated with Bybit. Investors should exercise caution and carefully assess the risks involved when using the platform, particularly in the wake of the lawsuit.
Is Bybit Safe to Use?
The safety of using Bybit is now a matter of contention, given the legal actions taken against the exchange. Individuals should exercise due diligence and consider the evolving situation before deciding whether Bybit is safe for their crypto transactions.
Is Bybit Available in Pakistan?
Bybit’s availability in Pakistan may be a topic of interest to those considering using the platform. Users in Pakistan should verify the current status of Bybit’s accessibility in their region, as it may be subject to regulatory changes.
Is Bybit Better Than Binance?
Comparing Bybit to other exchanges, such as Binance, is a common practice for investors seeking the best platform for their cryptocurrency trading needs. The outcome of the lawsuit and Bybit’s reputation in the aftermath will undoubtedly influence this comparison.
Which Countries Cannot Use Bybit?
Bybit’s availability in specific countries can be affected by regulatory restrictions. Investors and users should check Bybit’s official website and verify the platform’s accessibility in their respective countries, as it may be subject to legal constraints.
Has Bybit Been Hacked?
The lawsuit and the allegations it contains do not directly suggest hacking as the cause of the issues between Bybit and FTX. However, security concerns may arise due to the allegations of fraudulent activities. To determine if Bybit has ever been hacked, users should look into the platform’s security history and related incidents.
In conclusion, the lawsuit filed by FTX and Alameda bankruptcy advisers against Bybit has thrown the cryptocurrency world into turmoil. The allegations of fraudulent withdrawals using “VIP” privileges are both shocking and significant. As this legal battle unfolds, it will undoubtedly have a profound impact on the future of cryptocurrency exchanges and their regulation. Investors and users must stay informed and exercise caution in the ever-evolving crypto landscape. For more updates on this story, visit Todaycryptoprices.com/