BlockFi Seeks to Block Repayment Attempts by FTX and Three Arrows Capital
Bankrupt crypto lender BlockFi is trying to prevent FTX and Three Arrows Capital from retrieving millions of dollars to pay back their own creditors. BlockFi estimates that legal battles with FTX and Three Arrows Capital could cost its customers up to $1 billion.
Key Points:
– BlockFi claims that FTX misappropriated the $5 billion it initially lent, causing harm to FTX’s creditors. In an effort to protect its own creditors, BlockFi intends to block attempts by FTX and Three Arrows Capital to recover funds.
– FTX had given $400 million to BlockFi in June 2022, along with purchasing BlockFi equity. However, BlockFi argues that this was not a standard loan agreement and should not hold its creditors liable.
– BlockFi reportedly owes up to $10 billion to over 100,000 creditors. This includes $1 billion to its largest creditors and $220 million to bankrupt crypto hedge fund Three Arrows Capital.
– Three Arrows Capital had previously defaulted on loans from BlockFi, leading to foreclosure on collateral and a preferential payment to BlockFi.
– BlockFi’s creditors accuse the company of ignoring warnings and red flags when dealing with FTX and Alameda Research, leading to the collapse of both companies.
Hot Take:
BlockFi’s attempt to block repayment attempts by FTX and Three Arrows Capital highlights the complex legal battles and disputes within the cryptocurrency industry. The outcome of these legal battles will have significant implications for all parties involved and could impact the future of lending and investment in the crypto space.
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