BlockFi Approved to Begin Repaying Customers
Bankrupt crypto lender BlockFi has received approval from the United States Bankruptcy Court in New Jersey to start repaying its customers as part of its amended liquidation plan.
Customers Closer to Being Repaid
The customers of BlockFi, the bankrupt cryptocurrency lending platform, are one step closer to receiving their payments. The United States Bankruptcy Court in New Jersey has approved the company’s third amended Chapter 11 bankruptcy plan. However, the final amount that creditors will receive depends on BlockFi’s ongoing legal battle with FTX and other bankrupt crypto firms.
Uncertainty Surrounding BlockFi Plan
A court filing revealed that BlockFi’s chief restructuring officer and objections from FTX debtors have partially resolved issues with the amended plan. However, the United States Securities and Exchange Commission (SEC) objections remain partially unresolved. Technical modifications to the plan still need to be filed, and a compiled registry of creditors needs to be submitted by the debtors.
Unsecured creditors could receive payouts ranging from 35% to 63% of the total owed amount. Other creditors will receive partial payments in Bitcoin (BTC) and Ethereum (ETH).
Allegations Against BlockFi CEO
Creditors of FTX have alleged that BlockFi CEO Zac Prince was aware of FTX’s financial troubles before its collapse. BlockFi’s creditors have requested a new management firm oversee the bankruptcy proceedings due to allegations of misallocation of funds. They also claim that selling $240 million worth of crypto after bankruptcy resulted in a $100 million loss during a market rally.
“BlockFi’s mission through this process has been to maximize recoveries for our creditors, and conditional approval of our Disclosure Statement moves us one step closer to accomplishing that goal. We are confident that our Plan provides the best path to expeditiously return crypto to our clients, and we strongly urge BlockFi’s clients to vote to accept it.”
Hot Take: BlockFi Receives Approval for Customer Repayment
The bankrupt crypto lender, BlockFi, has been granted approval by the United States Bankruptcy Court in New Jersey to initiate the repayment process for its customers. This marks a significant milestone for the customers of BlockFi, as they move closer to receiving their payments. However, the final amount that creditors will receive is still contingent on BlockFi’s legal battle with FTX and other bankrupt cryptocurrency firms. The approval of BlockFi’s liquidation plan brings hope for a resolution in this complex situation. It remains to be seen how the ongoing legal proceedings will impact the final outcome for both the customers and creditors of BlockFi.
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