Court greenlights settlement talks between BlockFi and FTX

Please fol­low and like us:

On Nov. 14, U.S. Fed­er­al Judge Michael Kaplan gave a green light to cryp­tocur­ren­cy firms FTX and Block­Fi to begin set­tle­ment dis­cus­sions over a $1 bil­lion dispute.

The per­mis­sion comes in the after­math of BlockFi’s bank­rupt­cy fil­ing in Novem­ber 2022, as it seeks to recov­er funds owed by FTX and its sis­ter hedge fund, Alame­da Research.

The legal dis­pute orig­i­nat­ed in Novem­ber 2022 when Block­Fi, after suf­fer­ing sig­nif­i­cant loss­es due to the sud­den col­lapse of FTX, filed for Chap­ter 11 bank­rupt­cy. The col­lapse had a domi­no effect, lead­ing to an auto­mat­ic sus­pen­sion of proceedings.

The court has now lift­ed the stay order, paving the way for Block­Fi to dis­cuss poten­tial meth­ods of recov­er­ing the funds. Addi­tion­al­ly, FTX debtors can start pre­sent­ing their case regard­ing BlockFi’s claims in the FTX bank­rupt­cy proceeding.

The collapse

BlockFi’s deal­ings with FTX and Alame­da Research result­ed in sig­nif­i­cant finan­cial loss­es. These include approx­i­mate­ly $355 mil­lion frozen on FTX and an addi­tion­al $671 mil­lion that Alame­da Research owes.

Dur­ing the crim­i­nal tri­al of FTX founder Sam Bankman-Fried, Block­Fi CEO Zac Prince tes­ti­fied that FTX’s fail­ures played a cru­cial role in BlockFi’s downfall.

Prince informed the jury that his com­pa­ny had extend­ed near­ly $2 bil­lion in loans to Alame­da before FTX col­lapsed. He added that they were unaware of the hedge fund’s “unlim­it­ed” cred­it line from the exchange.

Restructuring

BlockFi’s cred­i­tors recent­ly endorsed a bank­rupt­cy restruc­tur­ing plan that received approval from over 90% of creditors.

The plan aims to wind down the com­pa­ny and reim­burse clients, offer­ing a poten­tial avenue for the recov­ery of assets lost to FTX and the col­lapsed hedge fund Three Arrows Cap­i­tal. How­ev­er, the plan is pend­ing final approval from the bank­rupt­cy court.

Block­Fi has also begun dis­cus­sions with 3AC, based on a Nov. 14 filing.

The post Court green­lights set­tle­ment talks between Block­Fi and FTX appeared first on Cryp­toSlate.

Source link

Please fol­low and like us: