FTX will pay bankrupt BlockFi $874 million in a settlement agreement
The two companies alternately filed for bankruptcy in November 2022
07.03.2024 - 11:10
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What’s new? A court has approved a settlement agreement between crypto lending platform BlockFi and crypto exchange FTX for $874,5 million, with both companies currently going through bankruptcy proceedings. Under the agreement, BlockFi will receive $185,2 million and $689,3 million from FTX and its affiliated hedge fund Alameda Research, respectively. This will allow BlockFi to pay its customers in full if FTX also meets its creditor distribution goals.
What else is known? In July 2022, BlockFi faced a massive deposit outflow after a similar platform, Celsius, froze customer assets. FTX agreed to provide BlockFi with a loan with an option to further buy out the platform.
Lending platform Celsius returns $2 billion in BTC and ETH to creditors
This is according to a report by law firm Kirkland & Ellis
Following the collapse of FTX in November 2022, BlockFi also froze customer funds, explaining that the exchange owed more than $1 billion. This amount included a $671 million unpaid Alameda loan and $355 million in BlockFi-owned crypto assets that were locked up on FTX as a result of its bankruptcy.
Between June and November, users withdrew $3,3 billion from BlockFi. That same month, BlockFi filed for bankruptcy with liabilities ranging from $1 billion to $10 billion.
It was later revealed that the loan from FTX resulted in an $800 million equity hit to BlockFi executives.
In October 2023, BlockFi announced that it had completed bankruptcy proceedings and began winding down operations and repaying creditors.
In February 2024, BlockFi reached a settlement agreement with another of its debtors, bankrupt crypto hedge fund Three Arrows Capital (3AC). The details of the agreement were not disclosed.
FTX founder’s lawyer asked for 6,5 years in prison in the $8 billion theft case instead of the maximum 110 years
The businessman will be sentenced on March 28
As for FTX, the new managers abandoned the idea of relaunching as they were unable to find investors and focused on liquidating assets to return funds to clients. According to the exchange’s liquidators at PwC, the first interim distribution of compensation will begin in late 2024/early 2025.
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