LONDON (Reuters) - Commodity trader Trafigura has settled a lawsuit filed by a firm owned by property and metals tycoons the Reuben brothers, Trafigura said on Wednesday, in a case linked to an ongoing alleged nickel fraud case.

The case was an off-shoot of a larger legal action in which Geneva-based Trafigura filed a lawsuit last year against businessman Prateek Gupta, alleging systematic fraud involving what were supposed to be nickel cargoes.

Hyphen Trading Ltd demanded $8.4 million in damages last year from Trafigura, saying it had paid Trafigura for 404 metric tonnes of nickel, but never received it.

The Hyphen lawsuit involves metal that Trafigura allegedly bought from Gupta and sold on to third parties.

A document from the London Commercial Court dated May 20 showed the case had been dismissed by consent of both parties and there was no order about which party would pay costs.

A Trafigura spokesperson confirmed the case had been settled but declined to give details, including whether it paid damages to Hyphen.

Hyphen and Reuben Brothers Ltd did not immediately respond to requests for comment.

Trafigura booked an impairment last year of $590 million due to the alleged fraud by Gupta and seven companies that Trafigura said are controlled by him.

Gupta has said in his defence that Trafigura staff devised the scheme at the centre of the case to substitute low-value metals such as scrap for high-grade nickel. Trafigura and its employees have denied knowing about any such fraud.

"In light of the Gupta fraud, Hyphen's reasonable suspicion is that the goods... were not in fact nickel... but were in fact worthless rubble," Hyphen said in a previous court document.

Trafigura has said in previous court documents that it sold a small number of the Gupta cargoes to third parties, including to U.S. company Argentem Trade Services.

Hyphen said that in July 2022 it agreed to buy nickel from Argentem, which was due to be shipped by Trafigura from Taiwan to Rotterdam.

Hyphen said on LinkedIn that it is part of the Reuben Brothers Group, and UK Companies House records show Hyphen Trading as a wholly-owned subsidiary of RB International UK.

(Reporting by Eric Onstad; additional reporting by Julian Luk; Editing by Kirsten Donovan)

By Eric Onstad