FTX, BlockFi score tentative settlement agreement
The agreement between the two bankrupt crypto companies awaits court approval
BlockFi CEO Zac Prince | DAS 2022 New York by Blockworks
BlockFi and FTX have reached a tentative agreement to settle all litigation and disputes, according to a Wednesday afternoon court filing.
The settlement, which also involves affiliated debtors, remains subject to court approval. But the announcement represents a significant development in a long-running legal process that began after FTX’s collapse in 2022.
BlockFi, as part of the plan, will receive $185.2 million as a customer claim against the FTX debtors. The bankrupt lender will receive a separate claim of $689 million against Alameda, which accounts for former loans.
The total works out to around $900 million, though only $250 million is secured.
“BlockFi ensures that it will receive that $250 million shortly after the FTX plan is confirmed and goes effective – likely allowing a second interim distribution in the near term, before distributions begin on general FTX unsecured claims,” Mohsin Meghji, BlockFi’s plan administrator, wrote in the Wednesday filing.
Read more: BlockFi emerges from bankruptcy less than a year after FTX collapse
The other claims will receive distributions based on the FTX plan and will be treated similarly to other claims.
FTX will waive the settlement claims against BlockFi as part of the agreement. BlockFi, in turn, will support the FTX plan and vote in favor of it.
“This negotiated agreement represents an excellent outcome for BlockFi and its customers – one better than could have been anticipated even on the effective date of the Plan,” it continued.
The settlement agreement comes months after a US bankruptcy court judge in November lifted an automatic holding that prevented the companies from continuing proceedings.
Crypto lending platform BlockFi filed for Chapter 11 bankruptcy in November 2022 following FTX’s implosion. BlockFi CEO and founder Zac Prince testified as a government witness in October during FTX founder Sam Bankman-Fried’s criminal trial, stating that Bankman-Fried’s actions “forced” his company into bankruptcy.
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