Key Takeaways
- Under the in-principle settlement, BlockFi will receive $874.5 million in claims against FTX & Alameda Research.
- $874.5 million comprises a claim of $185.2 million against FTX.com, which reflects the value of BlockFi customer assets held on the exchange, and an additional claim of $689.3 million.
In a notable development BlockFi, a company previously entangled in financial distress following the collapse of Terra’s stablecoin in mid-2022, has reached a substantial in-principle settlement totaling $874.5 million with FTX and Alameda Research estates. This agreement, revealed in a bankruptcy court filing on Wednesday, represents a significant stride towards resolving BlockFi’s bankruptcy proceedings.
According to the terms of the settlement, BlockFi is slated to receive the entirety of its claims against FTX and Alameda Research, with $250 million of the total amount being designated as a secured claim. This secured segment will take precedence in payment to BlockFi once FTX’s reorganization plan, filed in December and awaiting creditor approval, is greenlit.
In exchange for relinquishing its claims against BlockFi, FTX has agreed to waive “millions of dollars of avoidance claims and other counterclaims” against BlockFi, enabling BlockFi’s remaining claims to be processed alongside similar claims under FTX’s restructuring plan.
BlockFi, initially bolstered by a $400 million credit line from FTX, ultimately found itself caught up in bankruptcy proceedings, filing for Chapter 11 protection on November 28, 2022, citing exposure to FTX’s downfall. In August 2023, BlockFi said it had opened withdrawals for wallets of eligible users in the U.S. following a bankruptcy court order. In October last year, the embattled firm emerged from bankruptcy and opened wallet withdrawals.
This recent settlement follows a previous agreement between BlockFi and Three Arrows Capital(3AC) another crypto hedge fund grappling with financial challenges in 2022. In a February 6 hearing, New Jersey Bankruptcy Court Judge Michael Kaplan approved a settlement between 3AC and BlockFi to prevent further legal chaos as the latter claimed 3AC owed it $129 million, while the hedge fund claimed BlockFi owed it $280 million.
