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Bankrupt Crypto Lender BlockFi Inches Closer to Refunding Clients
The firm receives conditional approval for its restructuring plan from a U.S. bankruptcy court.
Updated Aug 4, 2023, 10:39 a.m. Published Aug 3, 2023, 4:15 a.m.
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BlockFi’s reorganization continues to inch forward as the firm announced that its disclosure statement was conditionally approved by the U.S. Bankruptcy Court in New Jersey.
“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,” Mark Renzi of Berkeley Research Group who is serving as BlockFi’s chief restructuring officer, said in a statement. “We are confident that our plan provides the best path to expeditiously return crypto back to our clients and we strongly urge BlockFi’s clients to vote to accept it.”
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The lender added that if the bankruptcy plan is approved, it will focus its efforts on recovering money from other firms, some of which have also declared bankruptcy and are in the process of restructuring. This includes Alameda Research, FTX, Three Arrows Capital, Emergent, Marex, and Core Scientific.
BlockFi’s proposed bankruptcy plan has its critics, however.
FTX, Three Arrows Capital and the Securities and Exchange Commission have all objected to BlockFi's proposed bankruptcy plan, as CoinDesk previously reported, arguing it unfairly downgrades their claims, lacks procedural fairness and is overly broad in absolving BlockFi and its management from legal responsibility, with over a billion dollars of disputed transactions in question.
The liquidator of Three Arrows Capital, or 3AC, said in early July that it will attempt to claw back $220 million of “preferential payments” to BlockFi.
The deadline to vote on the proposed reorganization is Sept. 11.
UPDATE (August 4, 10:30 UTC): Changes language in third graph to reflect that BlockFi may attempt to recover money from these firms.
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