- Judge clears $35M BlockFi-DOJ settlement in bankruptcy wind-down deal.
- BlockFi settled $875M with FTX, Alameda before DOJ asset dispute.
- BlockFi still owes $10B to creditors like Three Arrows Capital.
BlockFi has reached another important step in its bankruptcy wind-down. The US Department of Justice (DOJ) and BlockFi’s bankruptcy administrator have agreed to settle a lawsuit over a $35 million crypto asset transfer. The settlement was approved by Judge Michael B. Kaplan of the US Bankruptcy Court for the District of New Jersey last Friday, as court documents indicate.
BlockFi Settled $875M FTX, Alameda Claims Before DOJ Settlement
In May 2023, the lawsuit was initially filed. According to Bloomberg, the DOJ requested that BlockFi give over 35 million crypto assets to the US government. The money was linked to two Estonian citizens’ accounts. These citizens had another criminal case of fraud. According to the DOJ, it was entitled to take these assets using valid warrants.
However, the members of BlockFi stated that a transfer of assets should be done by the bankruptcy court. This formed a controversy on whether the court could halt the DOJ.
It is another settlement in the history of BlockFi as it is being shut down. Do Kwon is the founder of the crypto lender that had to go bankrupt due to the failure of FTX in November 2022. The said event rattled the crypto lending industry and led to several issues with BlockFi.
BlockFi announced in May 2023 that it was closing its web platform. BlockFi collaborated with Coinbase to assist its customers in reclaiming their money. Coinbase decided to assist customers in withdrawing funds. BlockFi Interest Account clients and retail loan holders, as well as clients with privately held money, were requested to claim their funds using Coinbase. The withdrawal deadline was April 28, 2024.
BlockFi has since attempted to reimburse its customers as much money as possible since it filed Chapter 11 bankruptcy. It has been forced to negotiate with difficult legal claims and other settlements along its way.
Before settling with the DOJ, BlockFi reached a major deal in March 2023. The company agreed to pay the estates of FTX and Alameda Research to the tune of $875 million. This agreement closed with about 1 billion worth of claims between the firms.
BlockFi Still Owes $10 Billion, Major Claims Include Three Arrows
According to the CEO of BlockFi, Zac Prince, all issues of the firm were a direct result of the actions of Lending CEO of FTX, Sam Bankman-Fried. His testimony revealed the impact of the failure of one company in the crypto community on others.
The myriad events surrounding the Chapter 11 plan of BlockFi were accorded court approval in September 2023. This enabled BlockFi to begin restoring its 10,000 or more creditors. Overall, BlockFi has as much as 10 billion in debt to over 100,000 creditors. Hedge fund Three Arrows Capital and other large investors make some of the largest claims.
Though the case of BlockFi is not completely solved and the bankruptcy is still ongoing, getting a settlement with the DOJ is one more step to solve the case. It aims to recoup as much money as possible for the users and creditors.
Since BlockFi has closed this chapter, the crypto community is still learning its lesson. They are hoping that new rules and improved risk management will prevent the repetition of similar problems. At the moment, the clients of the company BlockFi anticipate the size of the compensation they are going to receive once the company completes its liquidation process.
The post Judge Approves BlockFi-DOJ $35M Settlement Deal appeared first on Live Bitcoin News.
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