BlockFi Receives Approval to Repay Customers
Good news for BlockFi customers! The cryptocurrency lending platform has received approval from a U.S. Bankruptcy Court in New Jersey to proceed with its plan to repay its customers. This development brings hope that individuals who are owed money by BlockFi may finally start receiving their funds by the end of this year, according to a report by Bloomberg.
Judge Michael Kaplan Supports BlockFi’s Proposal
The green light for BlockFi’s liquidation plan was given by Judge Michael Kaplan, who expressed his support for the proposal. The plan had the backing of a committee representing customer interests and supporting creditors. In August, BlockFi had opposed FTX and Three Arrows Capital (3AC) from receiving the requested funds in bankruptcy court documents.
Approval for the Liquidation Plan
Sources reveal that Judge Kaplan approved BlockFi’s third amended Chapter 11 plan during a hearing on September 26, 2023. The approval came after BlockFi and the creditors committee resolved their differences regarding potential legal issues involving the company’s top executives. BlockFi currently has outstanding debts amounting to approximately $10 billion, with around $1 billion owed to its three largest creditors and an additional $220 million owed to bankrupt crypto hedge fund Three Arrows Capital.
The Origins of BlockFi’s Financial Troubles
BlockFi’s financial troubles began when FTX experienced a significant downturn last year. Creditors argued that BlockFi’s management overlooked warning signs before lending to FTX, which resulted in chaos in the cryptocurrency market due to plummeting prices. To prevent going under, BlockFi received a lifeline from FTX through a $400 million credit deal. As part of that agreement, FTX has the option to acquire BlockFi for $240 million if certain performance goals are met.
Hot Take: BlockFi Moves Closer to Resolving Customer Debt
The recent approval of BlockFi’s liquidation plan by a U.S. Bankruptcy Court brings optimism for the repayment of customer debts. With Judge Kaplan’s support and the backing of the creditors committee, there is a higher chance that customers who are owed money by BlockFi will start seeing their funds returned by the end of this year. This development marks a significant step forward in resolving BlockFi’s financial troubles and providing relief to its customers.
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