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Bankrupt crypto lender BlockFi—a knock-on casualty of FTX’s historic collapse last November—has been granted temporary relief from settling an outstanding penalty of $30 million levied on it by the SEC in February 2022, according to a Thursday court filing.
BlockFi initially agreed to pay the SEC $50 million and another $50 million in fines to 32 states for failing to register as a securities provider.
According to yesterday’s filing, BlockFi’s outstanding balance with the SEC totals $30,284,696.15, but it doesn’t have to be repaid until BlockFi’s debtors are reimbursed.
The Commission argued that its claims on the lender are “general unsecured claims” and are entitled to equal footing with the debtors’ but agreed to forego the penalty "in order to maximize the amount that may be distributed to investors and avoid delay in such distribution."
Life after FTX
When FTX filed for Chapter 11 bankruptcy back in November 11, BlockFi followed suit seventeen days later, citing a $1 billion hole in its balance sheet as a result of exposure to the disgraced exchange and its sister company, the trading firm Alameda Research.
While initiating bankruptcy proceedings, BlockFi also began suing former FTX CEO Sam Bankman-Fried for allegedly promising shares in Robinhood as collateral.
According to BlockFi’s bankruptcy filing, the company owes money to over 100,000 creditors with liabilities ranging from between $1 billion and $10 billion.
In January 2023, the former lender was granted approval to sell its remaining assets.
Earlier this month, BlockFi filed a lawsuit against Connecticut Banking Commissioner Jorge Perez and the state Commission for repeatedly refusing to accept its surrendered Connecticut money transmitter license.
Even though BlockFi wants to relinquish the license, the Commission insists on channeling the lender through court proceedings.