Legal Battle Between BlockFi and FTX Resumes
In a surprising development, U.S. bankruptcy judge Michael Kaplan has made a ruling to lift the stay suit, allowing the trial to proceed in the ongoing legal dispute between cryptocurrency lender BlockFi and FTX. This decision paves the way for BlockFi and FTX to engage in mediation to finalize claims settlements.
Reasons Behind BlockFi’s Pursuit of Settlement
If you’re unfamiliar with the FTX saga, here’s a quick recap. Prior to FTX filing for bankruptcy, BlockFi had struck a significant deal with FTX worth $240 million. However, the collapse of the FTX exchange in November 2022 resulted in the cryptocurrency lender filing for Chapter 11 bankruptcy.
BlockFi was also owed an additional $671 million by FTX’s sister company, Alameda Research, and had around $355 million frozen on the FTX exchange. During the trial, BlockFi’s CEO, Zac Prince, testified against Sam Bankman-Fried, revealing that the company suffered losses of “a little over a billion dollars” due to its involvement with FTX and Alameda, ultimately leading to bankruptcy.
The approval of BlockFi’s bankruptcy restructuring plan by its creditors signifies the end of a comprehensive process aimed at winding down the company and reimbursing its clients. The plan, backed by over 90% of creditors, will allow BlockFi to recover assets lost to FTX and the failed hedge fund Three Arrows Capital. The finalization of the plan now awaits approval from the bankruptcy court.
Court Ruling Implications
In a recent development on November 13, Judge Michael Kaplan’s ruling allows FTX debtors to present “arguments, defenses, counterclaims, setoffs, or otherwise… concerning the BlockFi claims in the FTX bankruptcy proceeding.”
This decision ensures that FTX debtors can present their case and challenge BlockFi’s claims during the FTX bankruptcy proceeding, promoting a fair and thorough examination of the claims and addressing potential disputes.
Hot Take: What Lies Ahead for BlockFi and FTX?
The resumption of the trial and the possibility of mediation between BlockFi and FTX mark a critical juncture in this high-stakes legal battle. Both parties are eagerly awaiting the court’s final decision. Stay tuned for further updates as this case unfolds.
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