FTX and Alameda Agree to Preliminary $874M Settlement with BlockFi

Last Updated on March 7, 2024

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Key Takeaways:

  • FTX and BlockFi, both in bankruptcy, have agreed on a near $1 billion settlement, potentially allowing full recovery for BlockFi customers.
  • The $874.5 million settlement includes a $185.2 million claim for BlockFi customer assets on FTX.com and a $689.3 million claim against Alameda Research for loans.
  • $250 million of the settlement is treated as a “secured claim,” giving BlockFi priority repayment after FTX’s bankruptcy resolution.
  • Early mediation efforts helped reduce litigation costs, focusing resources on customer distributions instead.
  • BlockFi’s bankruptcy filing in November 2022 was prompted by the collapse of FTX, leading to a series of lawsuits between the two entities.
  • The settlement marks a significant step towards BlockFi’s recovery, with the potential for customer asset withdrawals in 2024.

Bankrupt cryptocurrency enterprises FTX and BlockFi have successfully negotiated a settlement approaching the billion-dollar mark, heralding a potential full recovery for BlockFi’s clientele. In a landmark development dated March 6, both companies concurred on a settlement framework, with FTX consenting to compensate BlockFi to the tune of approximately $874.5 million.

This agreement, pending approval from Judge John Dorsey in Wilmington, Delaware, aims to settle BlockFi’s billion-dollar claims against FTX and includes FTX’s decision to forego various counterclaims against BlockFi.

BlockFi debtors
Bankruptcy court case filing. Source: CourtListener

The settlement’s composition includes a $185.2 million reimbursement related to BlockFi customer assets on FTX.com, coupled with a $689.3 million settlement for loans BlockFi extended to Alameda Research.

Bankruptcy court introduction
Bankruptcy court case Introduction. Source: CourtListener

Part of this settlement, $250 million, will be classified as a secured claim, ensuring BlockFi’s preferential repayment post-FTX’s bankruptcy resolution. This strategic settlement arose from early mediation efforts, minimizing litigation expenses and maximizing customer reimbursement potential.

Bankruptcy court details
250M as a secured claim. Source: CourtListener

BlockFi’s journey through Chapter 11 bankruptcy, initiated on November 28, 2022, following the abrupt downfall of FTX, underscores the interconnected challenges within the crypto sector. The ensuing legal battles between BlockFi and FTX, including disputes over a substantial $1 billion, a $400 million credit line, and nearly $900 million in loans to Alameda Research, highlight the tumultuous relationship between these entities.

BlockFi’s litigation efforts extended to recovering assets tied to loans provided to Alameda Research, amidst navigating its obligations to FTX.US stemming from a 2022 financial rescue package.

Bankruptcy court conclusion
Bankruptcy court case Conclusion. Source: CourtListener

With debts nearing $10 billion to over 100,000 creditors, BlockFi’s path to recovery remains complex. Yet, the settlement with FTX marks a critical step towards regaining stability, potentially enabling customer asset withdrawals in 2024.

As BlockFi reemerges from bankruptcy, the focus shifts towards reconciling customer interests with the intricate web of claims and counterclaims defining this high-stakes crypto legal drama.

About The Author

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Fleming Airunugba, a seasoned Web3 and crypto content expert, leverages his deep understanding of blockchain technology to bring the latest and most impactful news to the crypto community.

With a knack for engaging storytelling and strategic content creation, Fleming is dedicated to educating and inspiring his audience with insightful analysis on cryptocurrencies, NFTs, and the future of digital finance.

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