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The long-run legal battle between bankrupt cryptocurrency firms BlockFi and FTX reached a debt settlement for $874.5 Million.
On March 6, FTX, Almeda Research, and BlockFi struck a deal after a long series of lawsuits. BlockFi will receive around $874.5 Million in claims against cryptocurrency firms. All three firms had a complicated and intertwined relationship. However, the debt settlement emerged as a full recovery for customers.
FTX settles with BlockFi
As stated in a court filing on March 6, BlockFi and FTX have settled their conflicts as FTX agreed to pay up to $874.5 Million to BlockFi. The terms and conditions are contingent upon acceptance by Judge John Dorsey from the U.S. Bankruptcy Court in Delaware.
If fulfilled, BlockFi’s claims against FTX will be resolved. As per the settlement, around $185.2 Million is assigned to a claim against FTX whereas $689.3 Million is to a claim against Alameda Research for received loans.
Additionally, around $250 Million will be secured for BlockFi, and the rest of the amount will be used to pay customers and other creditors. However, the judge still needs to sign off on the agreement.
Kenneth Aulet, partner at Brown Rudnick reacted to the situation.
“It’s an excellent outcome for BlockFi’s customers and creditors”, said Aulet.
In November 2022, BlockFi filed for Chapter 11, indicating FTX’s failure as one of the main reasons behind the bankruptcy.
The debt settlement is a major step for both parties as it will help in mitigating losses for both firms. FTX had offered BlockFi $400 Million via its legal name West Realm Shires Services and positioned itself as one of the biggest creditors of BlockFi with a $275 Million claim. In addition, the platform claimed FTX owed it over $1 Billion.
Moreover, BlockFi has to pay over $10 Billion to approximately 100K creditors which involves $1 Billion to the three biggest creditors and $220 Million to Three Arrows Capital (3AC). Ankura Trust Company is one of the largest creditors of BlockFi.
BlockFi’s withdrawal plan
In October 2023, BlockFi emerged from bankruptcy and shared a withdrawal plan to return its assets to the customers and showcase a significant milestone in its financial recovery. As per the plan, customers can submit withdrawal requests and withdrawals will be available to all its wallet customers.
December 31, 2023, was the last date finalized by the BlockFi platform for the wallet withdrawal request. Meanwhile, the loan customers and lender’s BIA will have to wait for 2024. Furthermore, other distributions will depend on the progress of the asset recovery plan.
Additionally, Michael Kaplan, US Bankruptcy Court Judge resolved and approved a settlement between BlocFi and 3AC.
FTX was one of the biggest cryptocurrency exchanges introduced in May 2019 by Bankman-Fried, Caroline Ellison, and other former employees of Jane Street. The platform collapsed in November 2022.
BlockFi was a cryptocurrency lender introduced in 2017 by Zac Prince and Flori Marquez. In November 2022, the platform filed for bankruptcy soon after FTX.
Adarsh Singh is a true connoisseur of Defi and Blockchain technologies, who left his job at a “Big 4” multinational finance firm to pursue crypto and NFT trading full-time. He has a strong background in finance, with MBA from a prestigious B-school. He delves deep into these innovative fields, unraveling their intricacies. Uncovering hidden gems, be it coins, tokens or NFTs, is his expertise. NFTs drive deep interest for him, and his creative analysis of NFTs opens up engaging narratives. He strives to bring decentralized digital assets accessible to the masses.
