Key Takeaways
- BlockFi will recover millions from bankrupt FTX and Alameda in a potential win for creditors.
- FTX prioritized $250 million for repayment, and the exchange withdrew its claim against BlockFi.
- BlockFi is optimistic about full recovery, with funds freed for customer distributions.
A protracted conflict involving bankrupt cryptocurrency firms is nearing a resolution. Crypto lending company BlockFi is currently finalizing an “in principle” agreement with the bankrupt estates of FTX and Alameda Research.
A court document filed on Wednesday outlines the settlement terms. It says BlockFi should recover a total of $874.5 million in claims against both FTX and Alameda Research. This news marks a significant step towards concluding the dispute between the crypto entities.
BlockFi Nears Settlement with FTX and Alameda Research
BlockFi has detailed the breakdown of its $874.5 million settlement claims against FTX and Alameda Research, where $185.2 million represents the value of BlockFi’s assets held on the FTX exchange, and $689.3 million pertains to loans BlockFi extended to Alameda.
As part of the agreement, $250 million of the total claim will be categorized as a secured claim. This means BlockFi will receive priority payment once FTX’s bankruptcy exit plan secures creditor approval.
This arrangement allows BlockFi to proceed with a second interim distribution to its creditors shortly. Furthermore, the agreement includes FTX’s decision to withdraw its claim against BlockFi.
BlockFi Hails Settlement as Major Win for Company and Customers
While awaiting judicial approval for the settlement, BlockFi expressed optimism this development would significantly advance their goal of achieving full recoveries for their creditors.
BlockFi’s bankruptcy administrators have highlighted their negotiated settlement with FTX and Alameda Research as a remarkable achievement which surpassed expectations.
According to the filing, this agreement not only represents a superior outcome for BlockFi and its clientele but also ensures funds initially earmarked for litigation against FTX will now be redirected towards customer distributions.
Judge Lifts Stay on FTX and BlockFi, Greenlighting Claim Negotiations
FTX’s downfall significantly influenced to BlockFi’s bankruptcy filing. BlockFi, ultimately, attributed a considerable part of its financial woes to the collapse of the cryptocurrency exchange. When it filed for bankruptcy, BlockFi reported having around $355 million in assets on FTX’s platform. Not only that, but it was also owed about $671 million in loans from Alameda.
Following FTX’s bankruptcy filing, an automatic stay was imposed, barring creditors from advancing claims against the company. However, in November, a US judge lifted this stay for the proceedings involving FTX and BlockFi. This move paved the way for both parties to reengage in claim negotiations.
Additionally, the judge ordered FTX and BlockFi to enter mediation no later than December, marking a critical step towards resolving their disputes and potentially streamlining the path to financial recovery for involved parties.
Teuta is a seasoned writer and editor with more than 15 years of experience. She has expertise in covering macroeconomics and technology as well as the cryptocurrency and blockchain industries. She has worked for several publications as a journalist and editor, including Forbes, Bloomberg, CoinTelegraph, Coin Rivet, CoinSpeaker, VRWorld and Arcane Bear.
Teuta began her professional career in 2005, working as a lifestyle writer at Cosmopolitan in Croatia. From there, she branched out to several other publications, covering mainly business and the economy. She then turned her attention to the world of cryptocurrency and blockchain, believing that crypto is among the most important inventions in the history of humanity. Her involvement in fintech began in 2014 and she has since lent her expertise in writing, editing and gathering information about the world of crypto, blockchain, NFTs and Web3.
An all-round news hound, mentor, editor, and writer, Teuta enjoys teamwork and good communication. She holds a WSET2 diploma and has a thing for chablis, punkrock music and shoes. She also holds a double MA in Political science and Entrepreneurship.
