US Bankruptcy Judge Lifts Stay Suit in BlockFi-FTX Legal Dispute
In a significant development, US Bankruptcy Judge Michael Kaplan has made a ruling to lift the stay suit, enabling the resumption of trial proceedings in the ongoing legal dispute between cryptocurrency lender BlockFi and failed crypto exchange FTX. According to recent reports, the decision paves the way for BlockFi and FTX to engage in mediation for finalizing claims settlements.
Counterclaims Allowed
BlockFi, a lender operating in cryptocurrency, filed for bankruptcy in late November last year, citing various factors, including the ripple effects of FTX’s sudden collapse earlier that month. This triggered an automatic stay, effectively halting proceedings between the two parties. BlockFi found itself in a predicament with an estimated $355 million frozen on the crypto exchange’s platform, and it was owed an additional $671 million by FTX’s sister company, Alameda Research.
The stay has now been modified to allow the FTX Debtors to assert, defend, counterclaim, set-off, or otherwise deal with the BlockFi Claims in the FTX bankruptcy proceedings, according to a court order issued by US Bankruptcy Judge Michael Kaplan.
In late September, BlockFi’s creditors approved a bankruptcy restructuring plan to recover the assets lost to FTX and those lost when crypto hedge fund Three Arrows Capital collapsed in the summer of 2022. As previously reported by Bitcoinist, BlockFi has successfully emerged from bankruptcy. According to the lending company’s announcement, the company’s management, advisors, and stakeholders have dedicated “extensive efforts” to achieve this milestone, distinguishing BlockFi from many other retail crypto companies in terms of recovery.
FTX Transfers $24 Million Worth Of Assets To Exchanges
In recent moves, cryptocurrency exchange FTX has deposited substantial assets to other exchanges. Within the past five hours, the bankrupt exchange transferred assets worth $24 million to Kraken and OKX. These assets included 250,000 SOL ($13.5 million), 8.27 million MATIC ($7.41 million), and 1,500 ETH ($3.1 million). The motive behind these transfers and their implications remain undisclosed.
Moreover, FTX and its affiliate Alameda have made notable transfers totaling $438 million, comprising 42 different assets to multiple exchanges. The entities involved have not disclosed the specifics of these transfers, including their purpose, recipients, and underlying strategy.
According to SpotOnChain analytics platform data on Twitter (x.com/spotonchain/status/1724216328352047308?s=20), FTX’s liquidity in SOL appears limited. Currently holding only 3,408 SOLs valued at approximately $179,000 suggests potential challenges fulfilling large-scale SOL transactions on the exchange. Despite limited liquidity, they hold significant SOL under long-term lock-up until 2027 or 2028.
Featured image from Shutterstock; chart from TradingView.com
Hot Take: Legal Disputes Continue Between Crypto Lender BlockFi and Failed Exchange FTX
The lifting of the stay suit by US Bankruptcy Judge Michael Kaplan is a significant development in the legal dispute between cryptocurrency lender BlockFi and failed crypto exchange FTX. The ruling opens up possibilities for claims settlements through mediation between both parties as they continue their legal battle amid complex financial intricacies and asset transfers.
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