- A U.S. court has opened the door for BlockFi to proceed with its efforts to recover $1 billion in losses from FTX.
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On Nov. 14, U.S. Federal Judge Michael Kaplan gave a green light to cryptocurrency firms FTX and BlockFi to begin settlement discussions over a $1 billion dispute.
The permission comes in the aftermath of BlockFi’s bankruptcy filing in November 2022, as it seeks to recover funds owed by FTX and its sister hedge fund, Alameda Research.
The legal dispute originated in November 2022 when BlockFi, after suffering significant losses due to the sudden collapse of FTX, filed for Chapter 11 bankruptcy. The collapse had a domino effect, leading to an automatic suspension of proceedings.
The court has now lifted the stay order, paving the way for BlockFi to discuss potential methods of recovering the funds. Additionally, FTX debtors can start presenting their case regarding BlockFi’s claims in the FTX bankruptcy proceeding.
Read Also: FTX Former Execs Team Up To Build A New Crypto Exchange in Dubai
The Collapse
BlockFi’s dealings with FTX and Alameda Research resulted in significant financial losses. These include approximately $355 million frozen on FTX and an additional $671 million that Alameda Research owes.
During the criminal trial of FTX founder Sam Bankman-Fried, BlockFi CEO Zac Prince testified that FTX’s failures played a crucial role in BlockFi’s downfall.
Prince informed the jury that his company had extended nearly $2 billion in loans to Alameda before FTX collapsed. He added that they were unaware of the hedge fund’s “unlimited” credit line from the exchange.
Restructuring
BlockFi’s creditors recently endorsed a bankruptcy restructuring plan that received approval from over 90% of creditors.
The plan aims to wind down the company and reimburse clients, offering a potential avenue for the recovery of assets lost to FTX and the collapsed hedge fund Three Arrows Capital. However, the plan is pending final approval from the bankruptcy court.
BlockFi has also begun discussions with 3AC, based on a Nov. 14 filing.
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- Source: https://bitcoinworld.co.in/us-court-gives-a-green-light-to-ftx-and-blockfi-to-begin-settlement-discussions/
