BlockFi hails ‘excellent outcome’ in $875 million settlement with FTX BlockFi hails ‘excellent outcome’ in $875 million settlement with FTX
The failed lender will recieve $250 million immediately after FTX's bankruptcy plan is confirmed and goes effective.
2 min read
Updated: Mar. 7, 2024 at 12:29 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
Bankrupt crypto firms FTX and BlockFi have reached an in-principle agreement to settle all litigation and disputes for nearly $900 million, according to a Mar. 6 court filing.
Under the terms, BlockFi will receive $185.2 million in compensation for customer claims against the FTX debtors. Additionally, the insolvent lender is set to obtain a separate claim worth $689.3 million against Alameda Research, covering past loans extended to the now-defunct trading entity.
In total, BlockFi’s claims against FTX and Alameda Research amount to $874.5 million.
A significant portion of this settlement, or $250 million to be exact, is designated as a “secured claim,” prioritizing BlockFi’s reimbursement post-FTX’s bankruptcy resolution. The remainder hinges on the exchange’s capacity to settle its obligations to customers and other creditors.
In reciprocity, FTX will waive its settlement claims against BlockFi, while the latter pledges support for FTX’s bankruptcy plan and vows to vote favorably.
BlockFi’s legal representatives expressed satisfaction with the development, deeming the negotiated agreement a highly favorable outcome surpassing initial expectations.
“This negotiated agreement represents an excellent outcome for BlockFi and its customers – one better than could have been anticipated even on the effective date of the Plan,” the company’s lawyers wrote.
They added that the agreement would “ensure that money reserved for litigation with FTX is directed instead to customer distributions.”
Pending court approval, the settlement is a pivotal step toward resolving the discord between the two entities.
BlockFi, FTX’s convoluted relationship
BlockFi’s relationship with FTX and Alameda Research resulted in substantial financial setbacks for its customers, ultimately leading to its bankruptcy. Among these losses were approximately $355 million frozen on the exchange and an additional $671 million loan extended to Alameda Research.
During the criminal proceedings against FTX founder Sam Bankman-Fried, BlockFi CEO Zac Prince testified that FTX’s failures led to BlockFi’s demise.
Prince told the court that his company had extended loans totaling nearly $2 billion to Alameda before FTX’s collapse. He emphasized their lack of knowledge regarding the hedge fund’s “unlimited” credit line from the exchange.
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Oluwapelumi values Bitcoin's potential. He imparts insights on a range of topics like DeFi, hacks, mining and culture, underlining transformative power.
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FTX
FTX is a defunct cryptocurrency exchange, currently in bankruptcy proceedings, that was founded by Sam Bankman-Fried and Zixiao “Gary” Wang in May 2019.
BlockFi
BlockFi is a defunct cryptocurrency lender company which is currently in bankruptcy proceedings.
Alameda Research
Alameda Research was once a principal trading firm, operating as an arm of the failed crypto exchange, FTX.
Sam Bankman-Fried is the former CEO, and co-founder of defunct crypto exchange FTX and Alameda Research.
Zac’s experience includes leadership roles at multiple successful tech companies.