A judge approved a settlement of the counterclaims between bankrupt crypto hedge fund Three Arrows Capital and defunct crypto lender BlockFi yesterday.
But the details remain under seal, per New Jersey Bankruptcy Court Judge Michael Kaplan—despite efforts by the U.S. Trustee to argue that there was no justifiable need for a seal on the information, during a court hearing on Tuesday.
The dispute between the two firms centered around significant debts.
BlockFi alleged that 3AC was in debt to them for $129 million. In contrast, 3AC countered with claims that BlockFi owed them $280 million. This legal battle was part of broader turmoil within the cryptocurrency industry, involving multiple entities facing financial distress and legal challenges.
Crypto Lender BlockFi Filing for Bankruptcy and Conducting Major Layoffs as FTX Contagion Claims Another: Source
The FTX contagion has just claimed another crypto firm. BlockFi will file for Chapter 11 bankruptcy protection later today, a source at the company tells Decrypt. In an official announcement, the New Jersey-based company said it "will focus on recovering all obligations owed to BlockFi," but that "recoveries from FTX will be delayed" due to the ongoing bankruptcy proceedings at the fallen crypto exchange. The crypto lender is also laying off a large portion of its staff, the source said. BlockF...
BlockFi filed for Chapter 11 bankruptcy protection in November 2022. The filing happened after crypto exchange FTX collapse and filed for bankruptcy itself just two weeks prior. BlockFi's insolvency is in part due to its substantial exposure to the collapsed crypto exchange.
The New Jersey company had $355 million worth of cryptocurrencies frozen on FTX, a defaulted $671 million loan to Alameda Research, a trading firm closely associated with FTX, and had accepted a so-called "bailout" line of credit from FTX just months before the two firms collapsed.
In October, after less than a year of restructuring, BlockFi ended its bankruptcy.
3AC was ordered to liquidate during the summer of 2022, primarily triggered by the dramatic fall of cryptocurrencies Luna and TerraUSD in May.
Crypto Lender BlockFi Ends Bankruptcy With a Plan to Repay Customers
Fallen crypto lending firm BlockFi announced on Tuesday that it has “emerged” from bankruptcy, making its bankruptcy recovery plan effective as of October 24. Emergence is when a firm that previously entered bankruptcy successfully reorganizes its balance sheet so that its ready to repay its creditors. While not all customers can be made whole right now, the transition begins BlockFi’s process of recovering customer assets from third parties and to continue reconciling customer claims. “We are p...
The firm, which was one of the first major crypto entities to declare bankruptcy that year, filed for bankruptcy in the British Virgin Islands in late June 2022. This legal action was a direct response to the firm's inability to meet its financial obligations, including failing to satisfy margin calls and repay money lent from various entities within the crypto industry.
Its co-founders, Kyle Davies and Su Zhu, have since gone on to face jail time, launch and wind down a debt claim trading platform, and are now setting their sites on a derivatives trading project: OX.fun.
