BlockFi Resolves $874.5 Million Settlement with FTX and Alameda Research
In a recent bankruptcy court filing, cryptocurrency lender BlockFi has agreed to an in-principle settlement of $874.5 million with FTX and Alameda Research estates. The approval of this settlement is now pending with U.S. Bankruptcy Judge John Dorsey in Wilmington, Delaware.
Background of BlockFi vs. FTX Case
Back in 2023, BlockFi and FTX found themselves involved in legal disputes, aiming to recover funds that were lent between them prior to their joint bankruptcies in November 2022. As per the new settlement, FTX has committed to making a priority payment of $250 million to BlockFi. The remaining amount of the settlement is reliant on FTX’s efforts to reimburse its customers during the bankruptcy proceedings.
The close relationship between the two companies came to light after a market collapse in 2022 exposed FTX’s misuse of customer funds on a large scale. BlockFi had provided loans to FTX’s affiliate hedge fund, Alameda Research, and had sought financial assistance from FTX during a period of cryptocurrency market volatility in the summer of 2022.
Potential Settlement Terms in U.S. Courts
Under the terms of the settlement, FTX could potentially pay BlockFi a sum of up to $689 million related to the Alamexa loans, with the initial $250 million payment being secured. The remaining amount is subject to FTX’s ability to prioritize repayments to its customers and other debtors, as outlined in court documents filed across Delaware and New Jersey bankruptcy courts.
Additionally, FTX has agreed to compensate BlockFi with an extra $185.3 million, reflecting the funds held by BlockFi in its FTX trading accounts when the cryptocurrency platform collapsed in 2022.
While FTX expresses its intention to fully reimburse its customers, this outcome is not guaranteed, as mentioned by an FTX representative earlier this year.
In the event that FTX successfully meets its distribution objectives, BlockFi customers are expected to receive their claims in full value, according to the recent filing.