The crypto-lending platform BlockFi, which is going through bankruptcy proceedings, received court permission to carry out a plan to close the business. Clients can expect a return of 35–63% of the debt amount.
The exact parameters depend on BlockFi’s success in litigation against FTX and Three Arrows Capital. The total volume of claims against them reaches $1 billion.
According to the documents, some recipients expect payments in Bitcoin and Ethereum. The process could be launched by the end of 2023.
A committee representing the interests of clients and creditors supported the plan proposed by management.
It was approved after BlockFi settled a dispute regarding potential legal claims against the company’s management. Lenders accused top management of ignoring warning signs before extending the FTX loan.
According to the committee, despite a number of problems that arose during the review, BlockFi is now ready to pay off customer debt faster than other crypto firms going through the reorganization process.
As a reminder, in November 2022, the firm filed for bankruptcy under Chapter 11 of the US Bankruptcy Code. This happened about two weeks after the collapse of FTX and Alameda Research. Prior to this, BlockFi admitted that the exchange and its subsidiary had outstanding obligations to the company.
Previously, the court allowed the company to return $300 million to users of custodial accounts.
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