BlockFi, a bankrupt crypto lender, has reached a significant settlement with the estates of FTX and Alameda Research for nearly $1 billion dollars. This agreement marks a crucial step towards full recovery for BlockFi’s customers who were impacted by the fallout of FTX’s collapse.
The complex relationship between BlockFi, FTX, and Alameda Research has been a source of contention and uncertainty in the crypto world. BlockFi, which found itself in financial turmoil following FTX’s bankruptcy, has now secured an “in principle” agreement with the estates of FTX and Alameda Research for a total of $874.5 million in claims.
Of this amount, $250 million will be treated as a secured claim, ensuring that BlockFi receives priority payment once FTX’s bankruptcy plan is approved by its creditors. In exchange, FTX will drop its claims against BlockFi, allowing for a smoother resolution of the remaining claims under FTX’s plan.
Kenneth Aulet, a partner at Brown Rudnick representing the Committee of Unsecured Creditors, expressed satisfaction with the outcome, stating that the agreement is a positive development for BlockFi’s customers and creditors. The settlement not only secures the full value of BlockFi’s loans to Alameda and assets on the FTX exchange but also eliminates potential clawback claims by FTX that could have diminished these claims.
The intertwined nature of the relationships between FTX, Alameda, and BlockFi adds a layer of complexity to this settlement. BlockFi had received a substantial line of credit from FTX, and FTX was one of BlockFi’s largest creditors with a $275 million claim. The negotiated agreement is seen as a favorable outcome for all parties involved, surpassing initial expectations and ensuring that funds earmarked for litigation with FTX will now be directed towards customer distributions.
Overall, this settlement represents a significant milestone in BlockFi’s journey towards financial recovery and stability. With a judge’s approval pending, the agreement paves the way for BlockFi to move forward and fulfill its obligations to customers and creditors. The resolution of this long-standing issue is a positive development for the crypto industry as a whole, highlighting the importance of transparency, accountability, and cooperation in navigating complex financial relationships.