Bankrupt Crypto Firm BlockFi Gets Court Approval for Restructure Plan

Bankrupt crypto lending firm BlockFi has landed approval from bankruptcy Judge Michael A. Kaplan to start paying back customers based on a new plan.

According to the court filing released on Tuesday, the debtors are now tasked with compiling a list, detailing all the creditors.

Notably, this list will spotlight the top 50 creditors who did not have secured loans.

The court document also mentions that BlockFi’s chief restructuring officer Mark Renzi supports this new plan.

BlockFi initially presented its liquidation plan to the bankruptcy court on November 28. However, they had to revise and submit updated plans.

On September 14, FTX’s lawyers criticized the latest BlockFi plan, saying that it wasn’t fair to FTX's claims, and asked the court to reject it.

FTX's Role Under Scrutiny

BlockFi attributes its challenges to FTX's bankruptcy, stating it had significant exposure to the collapsed crypto exchange.

On November 11, 2022, it suspended withdrawals the same day FTX declared bankruptcy.

Later, on November 22, the company sought Chapter 11 bankruptcy protection.

However, FTX creditors alleged in July that BlockFi CEO Zac Prince was aware of FTX’s financial troubles prior to its November 2022 collapse.

A court document published in August indicated that unsecured creditors of BlockFi might receive around 35% to 63% of their claimed amounts.

This will largely depend on whether BlockFi succeeds in its legal battle against FTX and other bankrupt cryptocurrency firms.

BlockFi owes about $10 billion to its debtors. It owes $1 billion to its biggest three lenders and $220 million to crypto fund Three Arrows Capital.

Decrypt has reached out to BlockFi for comment and will update this article should the company respond.